Customer satisfaction trumps sales volume
Dear car manufacturer,
Today all of the car manufacturers can’t stop talking about customer satisfaction, especially when it comes to satisfying the car buyer. They are aware, just as everyone is, that customers visiting car dealerships rank their treatment worse than just about any other retailer. The manufacturers have been aware of this problem for about 30 years. As a Pontiac dealer, I can still remember the first “CSI” surveys that were sent out. The surveys have changed quite a bit and the methodology has changed quite a bit, but essentially it’s the same. When somebody buys a car from a dealer, she is mailed a questionnaire, sometimes it’s emailed, and sometimes the customer is surveyed by phone. The same system is used for service customers. These surveys are scored for customer satisfaction and the dealerships are measured against each other. Typically a dealership is ranked numerically within his local market (about a 100 mile radius), region (geographic section of the USA like the Southeast) and the entire USA.
The problem has been that these surveys haven’t worked very well. Realizing this, the manufacturers have steadily increased the penalties to dealers with bad scores and rewards to dealers with good scores. The penalties can be quite severe, including a dealer’s franchise being terminated, putting him out of business. The rewards sometimes include cash, vacations trips, prestigious honor clubs and societies, and even priority consideration for another dealership location. Guess what? It’s still not working! The scores are getting higher and higher, but the customers are not getting happier and happier. How can that be, you say??!!
The dealers are finding ways to manipulate the survey scores to their advantage. The stakes are so high for a good customer satisfaction score, that “fixing the game” has become pretty much S.O.P. with many car dealerships. This is especially egregious because the honest dealers, who go about improving their scores “the old fashioned way”…treating his customer better, are made to look bad relative to those who are cheating on their scores. In fact, sometimes you actually see dealers who don’t treat their customers very nicely getting higher scores than those who do! As if this wasn’t bad enough, manufacturers sometimes “look the other way” when a large volume dealers has a “CSI problem”. In awards, contests, and honorary societies, the manufacturers sometimes award “discretionary” points to bring a large volume dealer’s percentage score up to an acceptable level. I don’t have to tell you how demoralizing this is to those honest dealers who earn their points fairly. This sends a dangerous message to all of the dealers when they see sales volume trumping customer satisfaction in the priorities of the manufacturers.
The fact is that the manufacturer’s focus on customer satisfaction surveys has intensified to the point where most manufacturers’ executives care more about the numbers than the customers. They tell the dealers to “get those numbers up” which doesn’t necessarily correlate with “treat your customers better”. In a recent Automotive News article, an independent survey company found that 36% of car buyers said the salesperson asked for a perfect score and were asked to allow the dealership to address problems and complaints internally, rather than report them to the automaker. There are also instances of offering a free tank of gas or other perk for a good survey or bringing the blank survey into the dealership for the salesman to fill out. One manufacture recently caught a lot of dealers who had furnished phony email addresses for their customers so that the customer satisfaction survey would come to the dealership instead of the customer’s home.
Here is my recommendation to the car manufacturers. You can keep the surveys, but let them be used only as an information tool for improving the way the dealers treat their customers…no penalties or rewards. Replace the surveys with the “proof of the pudding” for customer satisfaction which is how many customers who buy a car from this dealer come back to buy another from the same dealer? Also, what percentage of the customers return to that dealer for service after they buy their car? What more do you need to know? Customer loyalty is the bottom line, plain and simple. If you must use a survey, use an independent survey company who surveys the dealers’ customers when he doesn’t know who is being surveyed or when it’s being done. The hardest thing for a manufacturer to do is to make customer satisfaction to trump sales volume, not the other way around. The manufacturers will find, if they have the courage to do that, the will “have their cake and eat it too”.
Sincerely,
Earl Stewart
Friday, August 31, 2007
Friday, August 24, 2007
OPEN LETTER TO FLORIDA CAR DEALERS
SUBJECT: ELIMINATE THE DEALER FEE
Dear fellow Florida car dealer, I started in the retail auto business in 1968, about 39 years ago, and I have seen a lot of changes in the way we dealers sell cars and the expectations of our customers. My remarks in this column are made sincerely and with a positive intent toward you and your customers. I am not trying to tell you how to run your business; I am suggesting a change that will reward both you and your customers.
Virtually every car dealer in Florida adds a charge to the price of the cars he sells, variously referred to as a “dealer fee”, “documentary fee”, “dealer prep fee”, etc. This extra charge is printed on your buyer’s orders and is programmed into your computers. It has been made illegal in many states including California. You charge this fee to every customer and it ranges from a few hundred dollars to nearly a thousand. Florida law requires that, if you charge a dealer fee to any customer, you must charge all customers. It also requires that you disclose in writing on the buyer’s order that this charge represents profit to the dealer. Florida law also requires that you include this fee in all advertised prices. You don’t always do this and you get around the law by limiting the number of advertised vehicles (as few as one).
The argument that I hear from most car dealers when I raise this issue is that the dealer fee is fully disclosed to the buyer on his buyer’s order. But, most car buyers are totally unaware that they are paying this. Who reads all of the voluminous paperwork associated with buying a car? The few who notice it assume it is an “official” fee like state sales tax or license and registration fee. Those few astute buyers who do question the fee are told that your dealership must charge this fee on very car, which would not be true if you were to make the decision to not charge the dealer fee to anyone. These astute buyers are also told that all other car dealers charge similar fees. This is almost true, but, as you know, my dealership does not.
The reason you charge this fee is simply to increase the cost of the car and your profit in such a manner that it is not noticed by your customer. This is just plain wrong. Dealers will admit this to me in private conversations and some will admit that they have considered eliminating the fee as I have, but are afraid of the drastic effect to their bottom line. By being able to count on an extra $895 in profit that the customer is not aware of or believes is an “official fee”, you can actually quote a price below cost and end up making a profit. Or, if the price you quote the customer does pay you a nice profit, you can increase that by several hundred dollars.
This “extra, unseen” profit is even better for you because you don’t pay your salesmen a commission on it. That’s being unfair to your employees as well as your customers. When the rare, astute buyer objects to the dealer fee, the law permits you to decrease the quoted price of the car by the amount of the dealer fee. This would have the same net effect of removing it. The salesman won’t permit this because he will lose his commission (typically 25%) on the decrease in his commissionable gross profit.
If you don’t know me, I should tell you that I don’t profess to be some “holier than thou” car dealer who was always perfect. Although, I never did anything illegal, when I look at some of my advertising and sales tactics 20+ years ago and more, I am not always proud. But, I have evolved as my customers have evolved. My customers’ expectations, level of education, and sophistication are much higher today. Your customers are no different. As I began treating my customers, and employees, better I discovered that they began treating me better. Yes, I used to charge a dealer fee ($495), and when I stopped charging it a few years ago, it was scary. But I did it because I could no longer, in good conscious, mislead my customers. Just because everybody else was doing the same thing did not make it right.
Now here is the good news. My profit per car did drop by about the amount of the dealer fee when I stopped charging it. But, when my customers realized that I was now giving them a fair shake and quoting the complete out-the-door price with no “surprises” the word spread. My volume began to rise rapidly. Sure, I was making a few hundred dollars less per car, but I was selling a lot more cars! I was, and am, selling a lot of your former customers. My bottom line is far better than it was when I was charging a dealer fee. You can do the same!
Why am I writing this letter? I’m not going to tell you that I think of myself as the new Marshall that has come to “clean up Dodge”. In fact, I am well aware that this letter is to some extent self-serving. Lots of people will read this letter to you and learn why they should buy a car from me, not you. And, I am also aware that most dealers who read this will either get angry and ignore it or not have the courage to follow my lead. But maybe you will be the exception. If you have any interest in following my lead, call me anytime. I don’t have a secretary and I don’t screen any of my phone calls. I would love to chat with you about this.
Sincerely, Earl Stewart
Dear fellow Florida car dealer, I started in the retail auto business in 1968, about 39 years ago, and I have seen a lot of changes in the way we dealers sell cars and the expectations of our customers. My remarks in this column are made sincerely and with a positive intent toward you and your customers. I am not trying to tell you how to run your business; I am suggesting a change that will reward both you and your customers.
Virtually every car dealer in Florida adds a charge to the price of the cars he sells, variously referred to as a “dealer fee”, “documentary fee”, “dealer prep fee”, etc. This extra charge is printed on your buyer’s orders and is programmed into your computers. It has been made illegal in many states including California. You charge this fee to every customer and it ranges from a few hundred dollars to nearly a thousand. Florida law requires that, if you charge a dealer fee to any customer, you must charge all customers. It also requires that you disclose in writing on the buyer’s order that this charge represents profit to the dealer. Florida law also requires that you include this fee in all advertised prices. You don’t always do this and you get around the law by limiting the number of advertised vehicles (as few as one).
The argument that I hear from most car dealers when I raise this issue is that the dealer fee is fully disclosed to the buyer on his buyer’s order. But, most car buyers are totally unaware that they are paying this. Who reads all of the voluminous paperwork associated with buying a car? The few who notice it assume it is an “official” fee like state sales tax or license and registration fee. Those few astute buyers who do question the fee are told that your dealership must charge this fee on very car, which would not be true if you were to make the decision to not charge the dealer fee to anyone. These astute buyers are also told that all other car dealers charge similar fees. This is almost true, but, as you know, my dealership does not.
The reason you charge this fee is simply to increase the cost of the car and your profit in such a manner that it is not noticed by your customer. This is just plain wrong. Dealers will admit this to me in private conversations and some will admit that they have considered eliminating the fee as I have, but are afraid of the drastic effect to their bottom line. By being able to count on an extra $895 in profit that the customer is not aware of or believes is an “official fee”, you can actually quote a price below cost and end up making a profit. Or, if the price you quote the customer does pay you a nice profit, you can increase that by several hundred dollars.
This “extra, unseen” profit is even better for you because you don’t pay your salesmen a commission on it. That’s being unfair to your employees as well as your customers. When the rare, astute buyer objects to the dealer fee, the law permits you to decrease the quoted price of the car by the amount of the dealer fee. This would have the same net effect of removing it. The salesman won’t permit this because he will lose his commission (typically 25%) on the decrease in his commissionable gross profit.
If you don’t know me, I should tell you that I don’t profess to be some “holier than thou” car dealer who was always perfect. Although, I never did anything illegal, when I look at some of my advertising and sales tactics 20+ years ago and more, I am not always proud. But, I have evolved as my customers have evolved. My customers’ expectations, level of education, and sophistication are much higher today. Your customers are no different. As I began treating my customers, and employees, better I discovered that they began treating me better. Yes, I used to charge a dealer fee ($495), and when I stopped charging it a few years ago, it was scary. But I did it because I could no longer, in good conscious, mislead my customers. Just because everybody else was doing the same thing did not make it right.
Now here is the good news. My profit per car did drop by about the amount of the dealer fee when I stopped charging it. But, when my customers realized that I was now giving them a fair shake and quoting the complete out-the-door price with no “surprises” the word spread. My volume began to rise rapidly. Sure, I was making a few hundred dollars less per car, but I was selling a lot more cars! I was, and am, selling a lot of your former customers. My bottom line is far better than it was when I was charging a dealer fee. You can do the same!
Why am I writing this letter? I’m not going to tell you that I think of myself as the new Marshall that has come to “clean up Dodge”. In fact, I am well aware that this letter is to some extent self-serving. Lots of people will read this letter to you and learn why they should buy a car from me, not you. And, I am also aware that most dealers who read this will either get angry and ignore it or not have the courage to follow my lead. But maybe you will be the exception. If you have any interest in following my lead, call me anytime. I don’t have a secretary and I don’t screen any of my phone calls. I would love to chat with you about this.
Sincerely, Earl Stewart
Friday, August 17, 2007
HISPANIC TV AD CONTROVERSY CONTINUES
Readers of this column know that my main focus is on giving potential car buyers advice on how to buy the right car at the right price without being taken advantage of by a car dealer. I have deviated from this column format twice recently in response to the controversy associated with a TV advertisement I am running in which I speak Spanish, with English subtitles. Today’s column will vary again because the controversy continues. I am getting far more positive responses to my Spanish ad than negative, but the steady pace of negative calls and emails continues to surprise me. Many of the negative calls are anonymous which makes me suspect as to their motivation, sincerity, and integrity.
Whenever a caller or emailer identifies herself, I always respond. In the interest of getting my reasons out to others who may take issue with my Spanish-speaking TV ad, I am introducing three actual negative emails and my responses (spelling and grammatical errors intact):
(1) Dr. Mr. Stewart I could not believe seeing your commercial in Spanish with English subtitles. Why not move your business over there instead of here. I would not buy from you after seeing that commercial. Others agree with me. This is America, not some Third World Country. You are not doing them a favor either by catering to them. They need to conform to our customs, not us conforming to their thrid world culture. You should be ashamed of yourself
Dear Larry,
I sincerely apologize for having offended you with my Hispanic TV commercial. Please allow me to explain.
There seems to be a common thread within the comments objecting to my Spanish commercial on our local, English-speaking TV stations.
That thread, and common misunderstanding, is that I am targeting Spanish speaking people who, either understand no English, or understand it not very well. This simply is not correct. My market research found that the vast majority of Hispanics in Palm Beach County watch English speaking channels. These are the potential Toyota buyers I am targeting. It’s easy to understand why local Hispanics watch English speaking TV if you have ever watched the 6 Spanish channels (which all originate out of Miami). The programming is of inferior quality and there is very little variety. There may be a few Hispanics who watch English speaking TV to learn to speak English better. Do you really think my 60 second commercial is discouraging these few from learning English?
Virtually all Hispanics living in Palm Beach County are bilingual and fluent in both Spanish and English. They are also mostly American citizens like you and me, most are 2nd or 3rd generation Americans, have good paying jobs, and can afford to buy a new car. Those relatively few Hispanics who don’t speak English can’t afford to buy a car. Many are here illegally and don’t even have driver’s licenses.
The response from our local Hispanic community has been overwhelmingly positive. My commercial got their attention, where it may not have had I spoken in English. You can easily understand why it got their attention if you can imagine yourself living in another country watching TV in your 2nd language. Suddenly, “out of the blue” you are listening to a Toyota commercial in English. Virtually all Hispanics found this very positive and several have bought cars because of this ad and many more say they plan to.
I could understand why you would be angry with Channel 5 if they ran Hispanic programming at times when you wanted to watch TV, but why are you angry because I ran a 60 second commercial. I hate commercials (except my own, of course). I mute commercials, change the channel, or take the opportunity to run to the kitchen or bathroom. When I sometimes accidentally have to watch a commercial (can’t find my remote control fast enough). I see lots of really obnoxious commercials. Some are absolutely terrible! (There is one car commercial where a balding guy with a beard shouts at you). I see very deceptive commercials which are obviously designed to trick us into buying from them. How about the commercials for feminine hygiene products, hemorrhoid medications, or anti-flatulents? Why don’t these kinds of commercials upset you? Have you called or written any of these advertisers? If you did, I bet you didn’t get a response. In fact, I bet you can’t even talk to them like you can me.
Several critics have accused me of “being all about making money”. You folks that pride yourself on being better Americans than I should understand that America is the land of free enterprise and capitalism. With lots of hard work, every American has a shot at the “gold ring”. I won’t apologize to anybody for trying to make a profit in my business. Many of these Hispanics, who a lot of the anti-Hispanic commercial letter writers seem to resent, came to this country because they were fleeing the communist state of Cuba. Profits and making money are frowned upon by communists. In Cuba, it’s not “all about money”; it’s all about poverty except for the communist party leaders who live quite well.
F Scott Fitzgerald said that the true test of a great mind is being able to hold two opposing views in your mind at the same time. In past presidential elections, our country was virtually split down the middle. If you are a democrat do you really think that the half of the country that voted Republican is bad or stupid? I ask the same question of the Republicans. If you don’t agree with me, why must you hate me and threaten me. I respect your opinion even if I disagree; why can’t you respect mine?
(2) Dear Mr. Stewart
Maybe you need to talk to Tom McKenna of Seacoast Water in Stuart, who is being forced out of his business by his Hispanic landlord because he just wants tenants that appeal to Hispanics. Wake up and see what is happening in this country and you are a part of it. Sure you are entitled to your views, but you are going to lose alot of customers who do not share your views. Believe it or not, people are turning away from companies who are advertising in Spanish. America should come first and the language here is English, not Spanish.
Dear Laura,
I don't know the specifics of the matter with Tom McKenna and his lease. I believe that you are referring to a story in the PB Post. I am a businessman and I do know that a landlord cannot force a tenant "out of business". Tenants have rights just like landlords. A landlord can elect not to renew a lease, in which case that tenant would have to lease space elsewhere. He would still be in business but at a different location. Landlords have rights too. If a landlord believes that they can lease their property to another tenant that will enhance their profits, that is what free enterprise is all about…and America is all about free enterprise. In some countries, the government can tell businessmen who they can and cannot lease to or do business with.
I am in the process of expanding my Toyota dealership. I purchased the property next door to my property. On that property is a Cuban restaurant, El Colonial. Their lease in up next month and I will not be renewing it, but I am working with the owner, Jamie Gomez, so that he will have plenty of time to find a new location. Jamie and his father, Jose, operate the restaurant and are American citizens who came here from Cuba. By the way, Jaime watches English speaking TV, loves my commercials, and recently bought a new Toyota Land Cruiser from me.
PS: If you like Cuban food, this is one of the best. It's Zagat rated very high and my employees and I eat there often. I will continue to do so when they move.
(3) This is for Earl Stewart. I saw you add on TV the other night and must say I was skocked. An Add in spanish- due what you must. Not only will I not buy a X2 Scion from you but I will ask my friend and fellow employees not to by a car from you. Why should I push 1 for english and I don't need your ads in my face in spanish.
Dear Charlotte,
I am sorry that my Spanish language ad offended you and I’m sorry that you have chosen not to do business with my dealership again.
You may be surprised when I tell you that I believe English should be learned and spoken by all citizens of this country and that I don’t support amnesty for illegal aliens. I also don’t like the answer machines that say “touch 1 for English or Spanish”. When you call my dealership you never get an answer machine. Please feel free to call me and discuss this further at anytime. My calls are not screened and I am always available to everybody.
My innocent and only intent was to sell some more Toyotas and Scions to American citizens of South Florida who are of Hispanic descent.
I advertised on English-speaking channels, rather than Spanish for two reasons:
(1) The vast majority of American citizens of Hispanic descent living in South Florida speaks English and watches the same channels you and I watch. My ad was not aimed at illegal immigrants who are very few and can’t buy cars anyhow. Most can’t afford a car and, if they could, cannot buy a car without a social security number, drivers’ license, insurance, etc.
(2) The only Spanish channels shown in our area originate in Miami and because of their vast audience, are cost prohibitive for me to advertise on. I am paying $100 to $350 per ad and the Spanish channel, which all originate out of Miami and cover all of South Florida, cost about $5,000 for a 30 second spot. This is way over my allowable advertising budget.
You may wonder why I spoke in Spanish and there are also two reasons for that:
(1) It is a sign of respect when you speak to someone in their native tongue or the native tongue of their parents or grandparents.
(2) Speaking in Spanish on a 100% English TV channel “cuts the clutter”. It got your attention and the attention of many more. It was very controversial with lots of supporters and some detractors. This is the goal of any advertiser…to have his commercial noticed.
Best wishes,
EarlStewart
Whenever a caller or emailer identifies herself, I always respond. In the interest of getting my reasons out to others who may take issue with my Spanish-speaking TV ad, I am introducing three actual negative emails and my responses (spelling and grammatical errors intact):
(1) Dr. Mr. Stewart I could not believe seeing your commercial in Spanish with English subtitles. Why not move your business over there instead of here. I would not buy from you after seeing that commercial. Others agree with me. This is America, not some Third World Country. You are not doing them a favor either by catering to them. They need to conform to our customs, not us conforming to their thrid world culture. You should be ashamed of yourself
Dear Larry,
I sincerely apologize for having offended you with my Hispanic TV commercial. Please allow me to explain.
There seems to be a common thread within the comments objecting to my Spanish commercial on our local, English-speaking TV stations.
That thread, and common misunderstanding, is that I am targeting Spanish speaking people who, either understand no English, or understand it not very well. This simply is not correct. My market research found that the vast majority of Hispanics in Palm Beach County watch English speaking channels. These are the potential Toyota buyers I am targeting. It’s easy to understand why local Hispanics watch English speaking TV if you have ever watched the 6 Spanish channels (which all originate out of Miami). The programming is of inferior quality and there is very little variety. There may be a few Hispanics who watch English speaking TV to learn to speak English better. Do you really think my 60 second commercial is discouraging these few from learning English?
Virtually all Hispanics living in Palm Beach County are bilingual and fluent in both Spanish and English. They are also mostly American citizens like you and me, most are 2nd or 3rd generation Americans, have good paying jobs, and can afford to buy a new car. Those relatively few Hispanics who don’t speak English can’t afford to buy a car. Many are here illegally and don’t even have driver’s licenses.
The response from our local Hispanic community has been overwhelmingly positive. My commercial got their attention, where it may not have had I spoken in English. You can easily understand why it got their attention if you can imagine yourself living in another country watching TV in your 2nd language. Suddenly, “out of the blue” you are listening to a Toyota commercial in English. Virtually all Hispanics found this very positive and several have bought cars because of this ad and many more say they plan to.
I could understand why you would be angry with Channel 5 if they ran Hispanic programming at times when you wanted to watch TV, but why are you angry because I ran a 60 second commercial. I hate commercials (except my own, of course). I mute commercials, change the channel, or take the opportunity to run to the kitchen or bathroom. When I sometimes accidentally have to watch a commercial (can’t find my remote control fast enough). I see lots of really obnoxious commercials. Some are absolutely terrible! (There is one car commercial where a balding guy with a beard shouts at you). I see very deceptive commercials which are obviously designed to trick us into buying from them. How about the commercials for feminine hygiene products, hemorrhoid medications, or anti-flatulents? Why don’t these kinds of commercials upset you? Have you called or written any of these advertisers? If you did, I bet you didn’t get a response. In fact, I bet you can’t even talk to them like you can me.
Several critics have accused me of “being all about making money”. You folks that pride yourself on being better Americans than I should understand that America is the land of free enterprise and capitalism. With lots of hard work, every American has a shot at the “gold ring”. I won’t apologize to anybody for trying to make a profit in my business. Many of these Hispanics, who a lot of the anti-Hispanic commercial letter writers seem to resent, came to this country because they were fleeing the communist state of Cuba. Profits and making money are frowned upon by communists. In Cuba, it’s not “all about money”; it’s all about poverty except for the communist party leaders who live quite well.
F Scott Fitzgerald said that the true test of a great mind is being able to hold two opposing views in your mind at the same time. In past presidential elections, our country was virtually split down the middle. If you are a democrat do you really think that the half of the country that voted Republican is bad or stupid? I ask the same question of the Republicans. If you don’t agree with me, why must you hate me and threaten me. I respect your opinion even if I disagree; why can’t you respect mine?
(2) Dear Mr. Stewart
Maybe you need to talk to Tom McKenna of Seacoast Water in Stuart, who is being forced out of his business by his Hispanic landlord because he just wants tenants that appeal to Hispanics. Wake up and see what is happening in this country and you are a part of it. Sure you are entitled to your views, but you are going to lose alot of customers who do not share your views. Believe it or not, people are turning away from companies who are advertising in Spanish. America should come first and the language here is English, not Spanish.
Dear Laura,
I don't know the specifics of the matter with Tom McKenna and his lease. I believe that you are referring to a story in the PB Post. I am a businessman and I do know that a landlord cannot force a tenant "out of business". Tenants have rights just like landlords. A landlord can elect not to renew a lease, in which case that tenant would have to lease space elsewhere. He would still be in business but at a different location. Landlords have rights too. If a landlord believes that they can lease their property to another tenant that will enhance their profits, that is what free enterprise is all about…and America is all about free enterprise. In some countries, the government can tell businessmen who they can and cannot lease to or do business with.
I am in the process of expanding my Toyota dealership. I purchased the property next door to my property. On that property is a Cuban restaurant, El Colonial. Their lease in up next month and I will not be renewing it, but I am working with the owner, Jamie Gomez, so that he will have plenty of time to find a new location. Jamie and his father, Jose, operate the restaurant and are American citizens who came here from Cuba. By the way, Jaime watches English speaking TV, loves my commercials, and recently bought a new Toyota Land Cruiser from me.
PS: If you like Cuban food, this is one of the best. It's Zagat rated very high and my employees and I eat there often. I will continue to do so when they move.
(3) This is for Earl Stewart. I saw you add on TV the other night and must say I was skocked. An Add in spanish- due what you must. Not only will I not buy a X2 Scion from you but I will ask my friend and fellow employees not to by a car from you. Why should I push 1 for english and I don't need your ads in my face in spanish.
Dear Charlotte,
I am sorry that my Spanish language ad offended you and I’m sorry that you have chosen not to do business with my dealership again.
You may be surprised when I tell you that I believe English should be learned and spoken by all citizens of this country and that I don’t support amnesty for illegal aliens. I also don’t like the answer machines that say “touch 1 for English or Spanish”. When you call my dealership you never get an answer machine. Please feel free to call me and discuss this further at anytime. My calls are not screened and I am always available to everybody.
My innocent and only intent was to sell some more Toyotas and Scions to American citizens of South Florida who are of Hispanic descent.
I advertised on English-speaking channels, rather than Spanish for two reasons:
(1) The vast majority of American citizens of Hispanic descent living in South Florida speaks English and watches the same channels you and I watch. My ad was not aimed at illegal immigrants who are very few and can’t buy cars anyhow. Most can’t afford a car and, if they could, cannot buy a car without a social security number, drivers’ license, insurance, etc.
(2) The only Spanish channels shown in our area originate in Miami and because of their vast audience, are cost prohibitive for me to advertise on. I am paying $100 to $350 per ad and the Spanish channel, which all originate out of Miami and cover all of South Florida, cost about $5,000 for a 30 second spot. This is way over my allowable advertising budget.
You may wonder why I spoke in Spanish and there are also two reasons for that:
(1) It is a sign of respect when you speak to someone in their native tongue or the native tongue of their parents or grandparents.
(2) Speaking in Spanish on a 100% English TV channel “cuts the clutter”. It got your attention and the attention of many more. It was very controversial with lots of supporters and some detractors. This is the goal of any advertiser…to have his commercial noticed.
Best wishes,
EarlStewart
Friday, August 10, 2007
Buy a Car You Can Afford
I was talking to a friend of mine this morning and I asked her what the one thing was that worried her most about buying a new or used car. She told me that it was paying more for a car than she intended to or could afford.
I have written in past columns that you should know exactly what car you want to buy before you do your comparison shopping. You have to compare “apples and apples”. You must also have a firm idea of the most that you will pay for that car. If you don’t know that you can buy a specific year, make, and model for your maximum budgeted price, go back to the drawing board and come up with a car you can afford. Even if you think you can but find out that you can’t after comparison shopping, don’t buy anything until you have chosen another car that you can afford.
When I say “know the price you can afford”, don’t think that I am talking about “monthly payment”. Too many people equate price with monthly payment. In fact, car dealers rely on this confusion to make big profits. If you really want to “make a car salesman’s day”, just walk into the dealership and tell them you’ll buy that car just as long as he can keep your payments under a certain amount. When you have told him that, you are telling him that you don’t care about the asking or selling price, whether you buy or lease, what interest rate you pay, what your trade-in allowance is, how well the model you chose retains it’s value, or how long you finance the car. Each of these items is inextricably tied together.
Many dealers add a supplementary price sticker alongside the federally mandated Monroney label. It often looks exactly like the Monroney and buyers assume it is part of the official MSRP. This extra label adds thousands of dollars to the real MSRP. Be sure you determine the real MSRP and the real discount from MSRP. When you lease a car, the leasing company owns the vehicle at the end of the lease, not you. That’s why lease payments are so much lower. If you buy the car, not nailing down the interest rate by competitive shopping allows the dealer to make a lot of money in finance reserve. This is the money banks pay dealers for charging a premium over the interest rate that the bank charges the dealer (called the “retention rate). The interest profit to the dealer can be in the thousands of dollars on a single transaction. If you don’t competitively shop your trade-in and check research sources on the Web, the dealer selling you the car may not allow you the fair market value for your trade-in, just another way of increasing his profit. Some makes and models of cars depreciate faster than others. After 3 years, some models retain up to 61% of their original cost but some retain as little as 25%. This is a huge price difference between two cars that you don’t find out about until you trade that car in on your next purchase. You can finance a car for 12 months and up to 72 months. The shorter the length of time, the lower the interest cost. Don’t be tempted to finance a car for longer than 36 months just to get the payment down.
You can understand why it’s not as easy as it sounds to have a firm idea of the most you are willing, or can afford, to pay for a car. The selling price and monthly payment are just two of 7 items that you must have a firm grasp of. There is also lease or buy, interest rate, trade in value, resale value of the car you are buying, and length of financing. If you know only 6 of the 7, you have left the car dealer a loophole that can cost you money.
I have written in past columns that you should know exactly what car you want to buy before you do your comparison shopping. You have to compare “apples and apples”. You must also have a firm idea of the most that you will pay for that car. If you don’t know that you can buy a specific year, make, and model for your maximum budgeted price, go back to the drawing board and come up with a car you can afford. Even if you think you can but find out that you can’t after comparison shopping, don’t buy anything until you have chosen another car that you can afford.
When I say “know the price you can afford”, don’t think that I am talking about “monthly payment”. Too many people equate price with monthly payment. In fact, car dealers rely on this confusion to make big profits. If you really want to “make a car salesman’s day”, just walk into the dealership and tell them you’ll buy that car just as long as he can keep your payments under a certain amount. When you have told him that, you are telling him that you don’t care about the asking or selling price, whether you buy or lease, what interest rate you pay, what your trade-in allowance is, how well the model you chose retains it’s value, or how long you finance the car. Each of these items is inextricably tied together.
Many dealers add a supplementary price sticker alongside the federally mandated Monroney label. It often looks exactly like the Monroney and buyers assume it is part of the official MSRP. This extra label adds thousands of dollars to the real MSRP. Be sure you determine the real MSRP and the real discount from MSRP. When you lease a car, the leasing company owns the vehicle at the end of the lease, not you. That’s why lease payments are so much lower. If you buy the car, not nailing down the interest rate by competitive shopping allows the dealer to make a lot of money in finance reserve. This is the money banks pay dealers for charging a premium over the interest rate that the bank charges the dealer (called the “retention rate). The interest profit to the dealer can be in the thousands of dollars on a single transaction. If you don’t competitively shop your trade-in and check research sources on the Web, the dealer selling you the car may not allow you the fair market value for your trade-in, just another way of increasing his profit. Some makes and models of cars depreciate faster than others. After 3 years, some models retain up to 61% of their original cost but some retain as little as 25%. This is a huge price difference between two cars that you don’t find out about until you trade that car in on your next purchase. You can finance a car for 12 months and up to 72 months. The shorter the length of time, the lower the interest cost. Don’t be tempted to finance a car for longer than 36 months just to get the payment down.
You can understand why it’s not as easy as it sounds to have a firm idea of the most you are willing, or can afford, to pay for a car. The selling price and monthly payment are just two of 7 items that you must have a firm grasp of. There is also lease or buy, interest rate, trade in value, resale value of the car you are buying, and length of financing. If you know only 6 of the 7, you have left the car dealer a loophole that can cost you money.
Friday, August 03, 2007
Advertising in Spanish on English TV
For those who missed my earlier column on this subject, I have been advertising my Toyota dealership on English speaking TV. Why would I advertise in Spanish on English speaking TV when everybody who watches speaks English? There are two reasons. First it “cuts the clutter”. The challenge to any advertiser is for her commercial to get noticed (and mine sure did!). The second reason I spoke in Spanish was to signal my respect to those whose [or that of their parents or grandparents] native tongue is Spanish. It is considered an international sign of respect to attempt to speak to someone in their native tongue. If you have ever traveled abroad, you may have experience this. If you have not seen my ad and would like to view it, click on this Internet link http://www.youtube.com/EarlStewartToyota.
Little did I realize when I first began to run my Hispanic TV advertisement what a stir it would have! The complaints started right away, some in the form of emails and some phone calls. I averaged about 5 calls a day and 2 or 3 emails. There were some positive comments but mostly negative. I began to wonder whether I was doing something that would hurt my business, but I could see no tangible evidence that anyone had not bought a car from me because of this ad. About half of the calls and emails were anonymous.
Recently the press picked up on this and there were news articles in the Sun Sentinel and the Palm Beach Post. This caused the tide to turn to favorable comments. Also, I’m getting very positive feedback from a lot of Hispanics. I have not received on single negative call or email from anyone of Hispanic descent. Currently the favorable comments are running about 10:1. I have gone to worrying about whether this ad would harm my business to actually wondering if this may not be the most effective advertisement I ever ran!
This whole personal experience was like taking a course in sociology. The negative callers fell into three categories. The first, and most numerous (about 50%), were the anonymous callers. They would call, state their outrage at my ad and then hang up. The second were those that were did give their names, but refused to listen to my reasoning behind my ad. These callers were less than the anonymous (about 25%) and about the same number as the third category. These callers were actually polite. They stated their concerns and were quite willing to listen to “my side of the story”.
The anonymous callers were virtually all rude, vulgar, and profane. From what I could garner from their one-way rant, they were very, very angry. I also detected “fear” in many of their voices. Some sounded like they had written their words out in advance so they could be sure they got it right. These callers clearly had no knowledge of what my ad is designed to accomplish. They seemed to think that most of the Hispanics in South Florida don’t speak English and are here illegally. I hope some of these callers will call back and listen to my explanation.
The second group was the most disturbing to me. They were not anonymous and they were not nearly as rough in their language, but I was disturbed because I could not change their minds even after they allowed me to explain. I do believe that most of them hung up with less anger in their hearts toward me and most of them dropped their threat never to buy a car from me, but they would not change their mind about my ad.
The third group was very nice and civil. Although they called to express dissatisfaction to my ad, they welcomed my explanation. I really enjoyed my exchanges with these intelligent and open minded callers. After hearing my explanation, they did a “180” and understood my advertising tactics. That’s not to say that they liked them and agreed with them, but they understood. They knew that I meant no disrespect to anyone and that I was simply a car dealer trying to sell some more cars. Several said that they would buy their next car from me.
The sociological lesson I learned (and am learning) from this experience is as follows. Education must always be a priority in a society. Ignorance is very dangerous. You cannot have bigotry and prejudice without ignorance being part of the equation. I learned this from the first set of anonymous callers. My next lesson is that education isn’t always enough. If a person is born and raised in bigoted, prejudiced environment, this can be imbedded in his emotions so deeply that education will not remove his negative feelings. Sometimes it takes more than one generation of knowledge and enlightenment to free one of prejudice and bigotry. We know that many of the Muslim terrorists were highly educated. My most pleasant lesson was from the third group who were educated, open minded, and willing to listen to another opinion. This final lesson was that educated, informed people who were raised in a loving environment can “agree to disagree”. It was F. Scott Fitzgerald who said that the most accurate test of a great mind is the ability to hold two opposing ideas in ones head at the same time”.
Little did I realize when I first began to run my Hispanic TV advertisement what a stir it would have! The complaints started right away, some in the form of emails and some phone calls. I averaged about 5 calls a day and 2 or 3 emails. There were some positive comments but mostly negative. I began to wonder whether I was doing something that would hurt my business, but I could see no tangible evidence that anyone had not bought a car from me because of this ad. About half of the calls and emails were anonymous.
Recently the press picked up on this and there were news articles in the Sun Sentinel and the Palm Beach Post. This caused the tide to turn to favorable comments. Also, I’m getting very positive feedback from a lot of Hispanics. I have not received on single negative call or email from anyone of Hispanic descent. Currently the favorable comments are running about 10:1. I have gone to worrying about whether this ad would harm my business to actually wondering if this may not be the most effective advertisement I ever ran!
This whole personal experience was like taking a course in sociology. The negative callers fell into three categories. The first, and most numerous (about 50%), were the anonymous callers. They would call, state their outrage at my ad and then hang up. The second were those that were did give their names, but refused to listen to my reasoning behind my ad. These callers were less than the anonymous (about 25%) and about the same number as the third category. These callers were actually polite. They stated their concerns and were quite willing to listen to “my side of the story”.
The anonymous callers were virtually all rude, vulgar, and profane. From what I could garner from their one-way rant, they were very, very angry. I also detected “fear” in many of their voices. Some sounded like they had written their words out in advance so they could be sure they got it right. These callers clearly had no knowledge of what my ad is designed to accomplish. They seemed to think that most of the Hispanics in South Florida don’t speak English and are here illegally. I hope some of these callers will call back and listen to my explanation.
The second group was the most disturbing to me. They were not anonymous and they were not nearly as rough in their language, but I was disturbed because I could not change their minds even after they allowed me to explain. I do believe that most of them hung up with less anger in their hearts toward me and most of them dropped their threat never to buy a car from me, but they would not change their mind about my ad.
The third group was very nice and civil. Although they called to express dissatisfaction to my ad, they welcomed my explanation. I really enjoyed my exchanges with these intelligent and open minded callers. After hearing my explanation, they did a “180” and understood my advertising tactics. That’s not to say that they liked them and agreed with them, but they understood. They knew that I meant no disrespect to anyone and that I was simply a car dealer trying to sell some more cars. Several said that they would buy their next car from me.
The sociological lesson I learned (and am learning) from this experience is as follows. Education must always be a priority in a society. Ignorance is very dangerous. You cannot have bigotry and prejudice without ignorance being part of the equation. I learned this from the first set of anonymous callers. My next lesson is that education isn’t always enough. If a person is born and raised in bigoted, prejudiced environment, this can be imbedded in his emotions so deeply that education will not remove his negative feelings. Sometimes it takes more than one generation of knowledge and enlightenment to free one of prejudice and bigotry. We know that many of the Muslim terrorists were highly educated. My most pleasant lesson was from the third group who were educated, open minded, and willing to listen to another opinion. This final lesson was that educated, informed people who were raised in a loving environment can “agree to disagree”. It was F. Scott Fitzgerald who said that the most accurate test of a great mind is the ability to hold two opposing ideas in ones head at the same time”.
Sunday, July 29, 2007
Dear “Anonymous”,
Thanks for your multiple (9) comments on several of my Blog articles yesterday. I noticed that all of these were sent between 1:43 PM and 2:26 PM Saturday. I say “thanks” because your disingenuous comments were quite transparently those of a particular ex-salesman now employed by another local Toyota dealer. In other words, you are no longer anonymous and judging from the time you spent writing email this Saturday afternoon (the busiest day and time for a car dealership), you aren't very busy selling cars. I’m sorry that you could not fit into our culture, but I think you have found a dealership where you should fit quite nicely. If you have a chance, read the parable, The Scorpion and the Frog. Let me know which of the two characters you most closely identify with. Lastly, “Mr. Anonymous”, if would like to speak directly to this “old man” or meet with me personally, you know that I don’t screen my calls, you have my cell phone number, and you know where you can find me.
Friday, July 27, 2007
The SubPrime Crisis and Car Sales
You have read a lot about the subprime crisis, especially if you invest in the stock market. All the talk so far has been about its effect on the housing market, which continues to decline, more so in South Florida than just about any other place in the USA.
Subprime loans are those made to those with poorer or lesser credit. When lenders get overly aggressive and careless in making these kinds of loans, it causes huge losses by the lenders, institutions that buy packages of these kinds of loans, and investors.
I can already see this affecting the retail automobile business. With the exception of a few imports like Honda, Toyota, and Hyundai, most car sales are way off. This is partly do to the plunge in the home building market, but it is also due to lenders tightening their credit reins which affect the subprime market first and most.
Those manufacturers of cars and dealers selling those makes whose sales are way off sometime resort to desperate measures to prop up their sales. The subprime customer is an “easy sale”. In fact, the subprime customer requires very little selling at all, just the ability to find someone to make him a car loan. The dealer can “sell” that kind of a customer any car at any price. The customer is just grateful that the dealer was able to get him financed. Dealers have a nickname for these kinds of customers…”Get-Me-Dones”.
There are a number of things that those with marginal or bad credit should be very careful of when buying a car. Oftentimes dealers will falsify credit applications in order to get the loans approved. The customer signs the credit application, testifying to the truth of all of the information. You are breaking a federal law if you obtain a loan by lying to the bank about your credit. More often than not, the car salesman or finance manager actually fills out the credit application and the customer just signs it. You should read your credit application very carefully and be sure that all of the information is accurate.
Another thing you should verify before signing a finance contract with a lender is that the options and accessories on the car you are buying have been accurately represented to the lender. Dealers will often represent to the lender non-existent accessories like leather, sunroofs, CD players, and even misrepresent the model of the car to make the bank think their collateral is worth more. This allows the dealer to obtain a larger loan than the bank should be making and also allows the dealer to make a larger profit.
You will notice more ads today aimed at those with credit problems. Dealers will advertise, “No credit-no problem” or “No credit application refused”. Another favorite is “We’re looking for good people with bad credit”. These ads are to target the desperate buyers who are easy to sell cars to and are likely to be very careless about verifying that their credit application is accurate. In fact, some buyers are desperate enough that they will join in the deception of the lenders.
The subprime crisis, which has been underway in the housing market for almost one year, is just getting started in the retail car market. There are a lot of bad subprime loans being carried by subprime lenders. They are already tightening up in their credit requirements and they are being much more careful about verifying the accuracy of credit applications and the accessories that are represented to be on the cars they finance. Lenders are calling the customers directly to ask them if they have leather or a sunroof on the car they just bought. More subprime lenders will be either going out of business or switching to conventional lending only.
All of this will hurt the sales of those makes and those dealers that have relied heavily on subprime customers. I wouldn’t advise you to buy stock in Ford, GM, Chrysler, or any other struggling auto manufacturer at this time. In my opinion, their sales will be dropping a lot more due to the subprime crisis.
Subprime loans are those made to those with poorer or lesser credit. When lenders get overly aggressive and careless in making these kinds of loans, it causes huge losses by the lenders, institutions that buy packages of these kinds of loans, and investors.
I can already see this affecting the retail automobile business. With the exception of a few imports like Honda, Toyota, and Hyundai, most car sales are way off. This is partly do to the plunge in the home building market, but it is also due to lenders tightening their credit reins which affect the subprime market first and most.
Those manufacturers of cars and dealers selling those makes whose sales are way off sometime resort to desperate measures to prop up their sales. The subprime customer is an “easy sale”. In fact, the subprime customer requires very little selling at all, just the ability to find someone to make him a car loan. The dealer can “sell” that kind of a customer any car at any price. The customer is just grateful that the dealer was able to get him financed. Dealers have a nickname for these kinds of customers…”Get-Me-Dones”.
There are a number of things that those with marginal or bad credit should be very careful of when buying a car. Oftentimes dealers will falsify credit applications in order to get the loans approved. The customer signs the credit application, testifying to the truth of all of the information. You are breaking a federal law if you obtain a loan by lying to the bank about your credit. More often than not, the car salesman or finance manager actually fills out the credit application and the customer just signs it. You should read your credit application very carefully and be sure that all of the information is accurate.
Another thing you should verify before signing a finance contract with a lender is that the options and accessories on the car you are buying have been accurately represented to the lender. Dealers will often represent to the lender non-existent accessories like leather, sunroofs, CD players, and even misrepresent the model of the car to make the bank think their collateral is worth more. This allows the dealer to obtain a larger loan than the bank should be making and also allows the dealer to make a larger profit.
You will notice more ads today aimed at those with credit problems. Dealers will advertise, “No credit-no problem” or “No credit application refused”. Another favorite is “We’re looking for good people with bad credit”. These ads are to target the desperate buyers who are easy to sell cars to and are likely to be very careless about verifying that their credit application is accurate. In fact, some buyers are desperate enough that they will join in the deception of the lenders.
The subprime crisis, which has been underway in the housing market for almost one year, is just getting started in the retail car market. There are a lot of bad subprime loans being carried by subprime lenders. They are already tightening up in their credit requirements and they are being much more careful about verifying the accuracy of credit applications and the accessories that are represented to be on the cars they finance. Lenders are calling the customers directly to ask them if they have leather or a sunroof on the car they just bought. More subprime lenders will be either going out of business or switching to conventional lending only.
All of this will hurt the sales of those makes and those dealers that have relied heavily on subprime customers. I wouldn’t advise you to buy stock in Ford, GM, Chrysler, or any other struggling auto manufacturer at this time. In my opinion, their sales will be dropping a lot more due to the subprime crisis.
Friday, July 20, 2007
Bigotry and Car Dealerships
Obviously bigotry exists world-wide among some employees of all businesses and some of their customers, not just in car dealerships. I have to confess that I have underestimated the problem over the years. I was born in 1940 and grew up among lots of prejudice and bigotry. Through education and legislation there were lots of improvements in our society. Up until a few short years ago, I thought we were coming very close to a virtually prejudice free society. I think I may have been overly optimistic.
A few years ago I established a firm policy at my dealership that all phone calls would be put through directly to the person being called. This included me. Nobody in my company has a secretary that screens her calls. The telephone receptionist will not ask you whose calling or what the nature of your call is. She will simply put the call straight through. If an employee is not in the dealership, the call is automatically transferred to his cell phone. After this, I added four red phones strategically located for maximum access to my customers. One is outside in the service drive. One is in the service customer waiting lounge, right next to the cashier. One is on the receptionist’s desk right in the middle of our showroom. The last red phone is in our body shop waiting room. There is a sign next to each phone, with my picture, that says to pick up the phone if we have not exceeded your expectations.
I think you will agree that this gives my customers better access to the owner and managers of my business than any other business you know of. So what has all that got to do with the subject of this article, “Bigotry in Car Dealerships”? Because I am “in the trenches”, I can tell you that a disproportionate number of complaints come from minorities and those who speak English with an accent. I estimate that about 20% of my customers fall into this category, but customer complaints from this group are more than 50%. For a while, I thought that this some kind of fluke. Then I even considered whether minorities and people whose primary language was other than English just complained more. But that simply is not logical. I finally decided that it was a communication problem. These people were unable to make themselves clearly understood by my employees and visa versa. But, I’m not sure that is the entire reason.
You may have seen my latest TV advertisement in which I speak Spanish with English subtitles (http://www.youtube.com/watch?v=DnrNYDI18VM). As you know the Hispanic population of South Florida is among the largest in the USA. Most of these Hispanic Americans are fluent in English and watch conventional English speaking TV channels. The reason I did the commercial in Spanish was to signal my respect for their culture. If you have traveled abroad, you know that most foreigners speak English in addition to their native tongue. But, when you address them in their own language, even a few simple phrases, this pleases them very much that you would go to this trouble. In the TV ad I simple say that I admire and respect the positive impact that Hispanics have on our culture and economy and I invite them to visit our dealership. I added the English subtitles because the vast majority of the viewers don’t speak Spanish and I wanted them to understand the purpose of my advertisement.
The ad began running a week ago and I have been surprised and shocked by the negative phone calls and emails I have received. There have not been a lot, but they have come in steadily every day. There are more people in South Florida than I realized who resent Hispanics. They tell me that they are insulted that I would allow a Spanish language ad to run on the TV set in their living room and that they would never buy a car from me. Some miss the point of the commercial entirely and tell me that “those Hispanics should learn to speak English!” I can’t figure out why they think Hispanic people are watching WPTV Channel 5 news if they don’t understand English. I also hear a lot of people who say they can’t stand the phone recordings that say “touch one for English”, etc. I don’t quite see how that relates to my TV ad. Perhaps the most disturbing phenomenon has been comments from friends of mine who feel strongly that the only language that should be permitted to be spoken in America is English.
I don’t want to get political on this. I can’t afford to take sides in a political debate because I’m a businessman. My goal in advertising in Spanish is to sell more Toyotas. Toyota happens to be the number one choice of Hispanics in America. A higher percentage of Hispanics drive Toyotas than non-Hispanics. Toyota ran the very first Spanish speaking spot in the Super Bowl. The vice president of Marketing responsible for this was James Farley who now heads the Lexus division of Toyota. He sent me an email when he saw my Hispanic ad, congratulating me and telling me that the feedback he received from his Spanish Super Bowl ad was that it made the Hispanic community very proud and increased their trust in Toyota.
I won’t ramble on or draw any kind of a conclusion because understanding why some human beings fear, dislike or distrust other human beings because of their language, country of origin, religion, or color of their skin will be debated and discussed for many years to come. Draw your own conclusions from my observations in this article and please remember that all I want to do is sell as many Toyotas as I can and make my customers (all of my customers) as happy as I can.
A few years ago I established a firm policy at my dealership that all phone calls would be put through directly to the person being called. This included me. Nobody in my company has a secretary that screens her calls. The telephone receptionist will not ask you whose calling or what the nature of your call is. She will simply put the call straight through. If an employee is not in the dealership, the call is automatically transferred to his cell phone. After this, I added four red phones strategically located for maximum access to my customers. One is outside in the service drive. One is in the service customer waiting lounge, right next to the cashier. One is on the receptionist’s desk right in the middle of our showroom. The last red phone is in our body shop waiting room. There is a sign next to each phone, with my picture, that says to pick up the phone if we have not exceeded your expectations.
I think you will agree that this gives my customers better access to the owner and managers of my business than any other business you know of. So what has all that got to do with the subject of this article, “Bigotry in Car Dealerships”? Because I am “in the trenches”, I can tell you that a disproportionate number of complaints come from minorities and those who speak English with an accent. I estimate that about 20% of my customers fall into this category, but customer complaints from this group are more than 50%. For a while, I thought that this some kind of fluke. Then I even considered whether minorities and people whose primary language was other than English just complained more. But that simply is not logical. I finally decided that it was a communication problem. These people were unable to make themselves clearly understood by my employees and visa versa. But, I’m not sure that is the entire reason.
You may have seen my latest TV advertisement in which I speak Spanish with English subtitles (http://www.youtube.com/watch?v=DnrNYDI18VM). As you know the Hispanic population of South Florida is among the largest in the USA. Most of these Hispanic Americans are fluent in English and watch conventional English speaking TV channels. The reason I did the commercial in Spanish was to signal my respect for their culture. If you have traveled abroad, you know that most foreigners speak English in addition to their native tongue. But, when you address them in their own language, even a few simple phrases, this pleases them very much that you would go to this trouble. In the TV ad I simple say that I admire and respect the positive impact that Hispanics have on our culture and economy and I invite them to visit our dealership. I added the English subtitles because the vast majority of the viewers don’t speak Spanish and I wanted them to understand the purpose of my advertisement.
The ad began running a week ago and I have been surprised and shocked by the negative phone calls and emails I have received. There have not been a lot, but they have come in steadily every day. There are more people in South Florida than I realized who resent Hispanics. They tell me that they are insulted that I would allow a Spanish language ad to run on the TV set in their living room and that they would never buy a car from me. Some miss the point of the commercial entirely and tell me that “those Hispanics should learn to speak English!” I can’t figure out why they think Hispanic people are watching WPTV Channel 5 news if they don’t understand English. I also hear a lot of people who say they can’t stand the phone recordings that say “touch one for English”, etc. I don’t quite see how that relates to my TV ad. Perhaps the most disturbing phenomenon has been comments from friends of mine who feel strongly that the only language that should be permitted to be spoken in America is English.
I don’t want to get political on this. I can’t afford to take sides in a political debate because I’m a businessman. My goal in advertising in Spanish is to sell more Toyotas. Toyota happens to be the number one choice of Hispanics in America. A higher percentage of Hispanics drive Toyotas than non-Hispanics. Toyota ran the very first Spanish speaking spot in the Super Bowl. The vice president of Marketing responsible for this was James Farley who now heads the Lexus division of Toyota. He sent me an email when he saw my Hispanic ad, congratulating me and telling me that the feedback he received from his Spanish Super Bowl ad was that it made the Hispanic community very proud and increased their trust in Toyota.
I won’t ramble on or draw any kind of a conclusion because understanding why some human beings fear, dislike or distrust other human beings because of their language, country of origin, religion, or color of their skin will be debated and discussed for many years to come. Draw your own conclusions from my observations in this article and please remember that all I want to do is sell as many Toyotas as I can and make my customers (all of my customers) as happy as I can.
Friday, June 29, 2007
When a Car Dealer Crosses the Line II
This is a follow-up on my last column which exposed a direct mail scam by a local car dealer. After the General Manager of this dealership mailed this letter out a short time ago, some recipients sent me copies. They either recognized that it was phony or they wanted my opinion. I did some research which proved that the claims this General Manager was making were false and discussed this in my last column.
After I wrote my last column, a customer sent me another letter he received from a different General Manager of a different car dealership which was the exact same letter as the first dealership mailed out. For clarification, I will repeat the text of both, identical letters below:
Dear ______,
You are receiving this letter because I have some very timely and important information about your vehicle. As General Manager of [Name of Dealership], I am making a personal appeal to purchase your vehicle. Because of a unique wholesale market condition, I have allocated additional funds and I am now in the position of being able to offer you over book value for your vehicle—whether you trade it in or I purchase it outright. My dilemma simply means that right now your vehicle is worth more than it was last month. Here’s why:
Normally, we purchase over 200 pre-owned vehicles per month at nationally recognized automotive auctions. Unfortunately, flood damaged Katrina vehicles (see enclosed article) are currently showing up at these auctions. I simply will not allow my auction buyers to risk our reputation by inadvertently purchasing one of these units and reselling it to one of our customers. Therefore, I have put a moratorium on any auction purchases until I am confident flood damaged vehicles are properly disclosed to our wholesale buyers.
This is a straight forward, genuine appeal to purchase your vehicle. I need local vehicles with local histories—vehicles with a pedigree so to speak. As always, [Name of Dealership] will pay off your trade balance as part of any final retail transaction. My purchase offer is in addition to all [Name of make of car] incentives, should you decide to maximize your market timing. But hurry, my appraisers have from now until the close of business, 6:00PM [Date] to extend thee purchase offers. Call me at [Dealership number] to receive a no obligation, written trade or purchase estimate.
Sincerely,
[Signature of General Manager]
As I said this exact letter was mailed out by two dealerships within 10 miles of each other. One was a Ford dealership and one was a Toyota dealership. One is owned by a public corporation and one is owned by a local person. There is no affiliation between the two. Obviously this direct mail scam is being sold to car dealers by some unscrupulous marketing company. Neither of these dealerships sells even close to 200 used cars a month and there would be no reason in the world for them to purchase “over 200 pre-owned vehicles per month at nationally recognized automotive auctions”. There are very likely lots of other dealerships sending out this same letter. If you receive the letter above, throw it in the trash. It is absolutely and shamelessly false.
Letters of this nature are peddled to dealers with promises of how many “suckers” they will bring into the dealers’ showrooms. Oftentimes they have a guarantee of a certain minimum percentage…3% would be a very effective mailer. The direct mail marketing company would guarantee that if the 10,000 mailers didn’t bring in at least 300 potential victims, they would run another promotion free. Dealers usually count on selling about one out of every five prospects, which means that this mailer could result in about 60 sales resulting from this lie.
You may ask how car dealers get away with something like this. The answer is that direct mail usually falls beneath the “radar” of the regulators. When you consider all of the deceptive advertising out there, the regulators have a hard enough time keeping the TV, radio, and newspaper advertising clean, advertising that is very visible to all. Only the unfortunate addressees usually see the direct mail advertising. My advice to you is to ignore all direct mail advertising unless you have personal knowledge of the integrity of the company.
After I wrote my last column, a customer sent me another letter he received from a different General Manager of a different car dealership which was the exact same letter as the first dealership mailed out. For clarification, I will repeat the text of both, identical letters below:
Dear ______,
You are receiving this letter because I have some very timely and important information about your vehicle. As General Manager of [Name of Dealership], I am making a personal appeal to purchase your vehicle. Because of a unique wholesale market condition, I have allocated additional funds and I am now in the position of being able to offer you over book value for your vehicle—whether you trade it in or I purchase it outright. My dilemma simply means that right now your vehicle is worth more than it was last month. Here’s why:
Normally, we purchase over 200 pre-owned vehicles per month at nationally recognized automotive auctions. Unfortunately, flood damaged Katrina vehicles (see enclosed article) are currently showing up at these auctions. I simply will not allow my auction buyers to risk our reputation by inadvertently purchasing one of these units and reselling it to one of our customers. Therefore, I have put a moratorium on any auction purchases until I am confident flood damaged vehicles are properly disclosed to our wholesale buyers.
This is a straight forward, genuine appeal to purchase your vehicle. I need local vehicles with local histories—vehicles with a pedigree so to speak. As always, [Name of Dealership] will pay off your trade balance as part of any final retail transaction. My purchase offer is in addition to all [Name of make of car] incentives, should you decide to maximize your market timing. But hurry, my appraisers have from now until the close of business, 6:00PM [Date] to extend thee purchase offers. Call me at [Dealership number] to receive a no obligation, written trade or purchase estimate.
Sincerely,
[Signature of General Manager]
As I said this exact letter was mailed out by two dealerships within 10 miles of each other. One was a Ford dealership and one was a Toyota dealership. One is owned by a public corporation and one is owned by a local person. There is no affiliation between the two. Obviously this direct mail scam is being sold to car dealers by some unscrupulous marketing company. Neither of these dealerships sells even close to 200 used cars a month and there would be no reason in the world for them to purchase “over 200 pre-owned vehicles per month at nationally recognized automotive auctions”. There are very likely lots of other dealerships sending out this same letter. If you receive the letter above, throw it in the trash. It is absolutely and shamelessly false.
Letters of this nature are peddled to dealers with promises of how many “suckers” they will bring into the dealers’ showrooms. Oftentimes they have a guarantee of a certain minimum percentage…3% would be a very effective mailer. The direct mail marketing company would guarantee that if the 10,000 mailers didn’t bring in at least 300 potential victims, they would run another promotion free. Dealers usually count on selling about one out of every five prospects, which means that this mailer could result in about 60 sales resulting from this lie.
You may ask how car dealers get away with something like this. The answer is that direct mail usually falls beneath the “radar” of the regulators. When you consider all of the deceptive advertising out there, the regulators have a hard enough time keeping the TV, radio, and newspaper advertising clean, advertising that is very visible to all. Only the unfortunate addressees usually see the direct mail advertising. My advice to you is to ignore all direct mail advertising unless you have personal knowledge of the integrity of the company.
BE VERY CAREFUL WHEN LEASING A CAR
I just received a letter and a follow-up phone call from an attorney who is representing a large group of buyers from one dealership who he is alleging was taken advantage of by a South Florida car dealer. He and his clients are readers of my column and he was asking my advice. All of these buyers are elderly. In fact, two have passed away since the lawsuit was filed. These buyers paid huge profits to this dealer, thousands of dollars more than an average profit on a new car which is typically under $2,000. These senior citizens came in to buy a car, but salesmen convinced them that leasing was a better option because they put so few miles on their cars (This is not true). This lawyer told me that, when he confronted the owner of the dealership, he admitted to making exorbitant profits on his clients and said, “It’s all legal and there is nothing you can do about it!”
It’s true that, when we get older, we drive less and put fewer miles on our cars. But that is not a good reason to lease a car instead of buy one. A car with fewer miles is worth more than one with a lot of miles, all things being equal. You have an advantage trading in a car that you own with low mileage. You will get a better trade-in allowance on your next purchase or you can sell it for more with low miles. In fact, you actually have a bigger advantage if you own a car with extraordinarily low miles. Leasing companies typically allow 10,000 or more miles per year, after which they add charge for each mile you have above that. If you put less than 10,000 miles per year on your car, they don’t “pay” you any money per mile. This lower mileage advantage goes to the leasing company.
After this dealer had given these customers a false reason convincing them they should lease instead of buy, he proceeded to get as much cash from these customers as he could squeeze out of them. If they were trading in a car, he undervalued the appraisal. He commanded large down payments (down payments are not normally necessary when leasing) with the excuse of “getting their payments down to what they could afford”. Remember that these customers came into the dealership with the mindset of buying, not leasing. They were prepared to make down payments, which are usually necessary on a purchase. They also had monthly payments in mind, based on purchasing. When you make a down payment on a lease and end up with a payment of about the same amount as if you purchased the car, you are paying the dealer a HUGE profit. After making a down payment and all of your monthly payments on a purchase, you own the vehicle. After making a similar down payment and similar monthly payments on a lease, you own nothing. What would have been equity in your car of thousands of dollars if you had purchased, was converted to profit for the dealer because you leased.
Don’t get me wrong, leasing is a viable alternative to buying but you must carefully analyze each option before you commit to one or the other. The best way to lease a car is to “buy it first”. I don’t mean that literally. But you should get your very best selling price on a car even if you would rather lease it. In past columns, I have told you how to get your best price. Decide first on the exact make, year, model, and equipment you want. Then, comparing “apples and apples”, get prices from at least three dealerships. Also, your Internet price is usually the lowest price. Don’t be fooled by “dealer fees”. Be sure you get an “out-the-door” price plug tax and tag only. Separate the shopping of the price on the car from your trade-in. Get at least three bids from other dealers of the same make to buy your trade-in. Offer the dealer you choose to buy your new car from the right of first refusal.
Now you have selected the dealer with the best price. Tell the dealer that you have changed your mind. You want to lease the car, not buy it. Tell him that you know that, when he calculates your lease payment, he should use your quoted price as the “capitalized cost” on the lease. This is the sum which, when applying the lease factor (interest rate) and residual value (what the lease car is estimated to be worth at the end of the lease), gives you your monthly payment. All lease companies also add something called a “lease acquisition fee”, as much as $800. This is just like a “dealer fee” and is profit for the leasing company and usually the dealer gets a piece of it. You may be able to negotiate that down, at least the dealer’s part of the profit. Now, tell him how many miles you typically drive and, if its more than the leasing company allows, include that extra cost into the lease so that you have no “surprises” at the end of the lease. Be sure that the dealer gets payments from several leasing companies. Different leasing companies offer different lease factors and sometimes different residuals. Your capitalized cost will remain constant, but you will choose the lease company with the highest residual and lowest lease factor which will result in the lowest payment.
I have one final warning about leasing. Just as a dealer will mark up the interest rate from the bank when you finance a car, a dealer will mark up the lease factor (interest cost) from the leasing company. Be sure that that the dealer has not done this on your lease contract. Agree to sign the lease contract only if the dealer will guarantee in writing that he has not marked up the lease factor that the leasing company charges.
It’s true that, when we get older, we drive less and put fewer miles on our cars. But that is not a good reason to lease a car instead of buy one. A car with fewer miles is worth more than one with a lot of miles, all things being equal. You have an advantage trading in a car that you own with low mileage. You will get a better trade-in allowance on your next purchase or you can sell it for more with low miles. In fact, you actually have a bigger advantage if you own a car with extraordinarily low miles. Leasing companies typically allow 10,000 or more miles per year, after which they add charge for each mile you have above that. If you put less than 10,000 miles per year on your car, they don’t “pay” you any money per mile. This lower mileage advantage goes to the leasing company.
After this dealer had given these customers a false reason convincing them they should lease instead of buy, he proceeded to get as much cash from these customers as he could squeeze out of them. If they were trading in a car, he undervalued the appraisal. He commanded large down payments (down payments are not normally necessary when leasing) with the excuse of “getting their payments down to what they could afford”. Remember that these customers came into the dealership with the mindset of buying, not leasing. They were prepared to make down payments, which are usually necessary on a purchase. They also had monthly payments in mind, based on purchasing. When you make a down payment on a lease and end up with a payment of about the same amount as if you purchased the car, you are paying the dealer a HUGE profit. After making a down payment and all of your monthly payments on a purchase, you own the vehicle. After making a similar down payment and similar monthly payments on a lease, you own nothing. What would have been equity in your car of thousands of dollars if you had purchased, was converted to profit for the dealer because you leased.
Don’t get me wrong, leasing is a viable alternative to buying but you must carefully analyze each option before you commit to one or the other. The best way to lease a car is to “buy it first”. I don’t mean that literally. But you should get your very best selling price on a car even if you would rather lease it. In past columns, I have told you how to get your best price. Decide first on the exact make, year, model, and equipment you want. Then, comparing “apples and apples”, get prices from at least three dealerships. Also, your Internet price is usually the lowest price. Don’t be fooled by “dealer fees”. Be sure you get an “out-the-door” price plug tax and tag only. Separate the shopping of the price on the car from your trade-in. Get at least three bids from other dealers of the same make to buy your trade-in. Offer the dealer you choose to buy your new car from the right of first refusal.
Now you have selected the dealer with the best price. Tell the dealer that you have changed your mind. You want to lease the car, not buy it. Tell him that you know that, when he calculates your lease payment, he should use your quoted price as the “capitalized cost” on the lease. This is the sum which, when applying the lease factor (interest rate) and residual value (what the lease car is estimated to be worth at the end of the lease), gives you your monthly payment. All lease companies also add something called a “lease acquisition fee”, as much as $800. This is just like a “dealer fee” and is profit for the leasing company and usually the dealer gets a piece of it. You may be able to negotiate that down, at least the dealer’s part of the profit. Now, tell him how many miles you typically drive and, if its more than the leasing company allows, include that extra cost into the lease so that you have no “surprises” at the end of the lease. Be sure that the dealer gets payments from several leasing companies. Different leasing companies offer different lease factors and sometimes different residuals. Your capitalized cost will remain constant, but you will choose the lease company with the highest residual and lowest lease factor which will result in the lowest payment.
I have one final warning about leasing. Just as a dealer will mark up the interest rate from the bank when you finance a car, a dealer will mark up the lease factor (interest cost) from the leasing company. Be sure that that the dealer has not done this on your lease contract. Agree to sign the lease contract only if the dealer will guarantee in writing that he has not marked up the lease factor that the leasing company charges.
Friday, June 15, 2007
When a Car Dealer Crosses the Line
Readers of this column know my thoughts about unethical advertising. I have written about advertising a very low price which is applicable to only one car that is always “gone” when you ask to see it. I wrote about advertising giant discounts on cars that are artificially marked up over MSRP. You have read several of my articles about dealer fees which are really just additional dealer profit, disguised as a federal, state, or local “official” fee. You probably know about “get em in the door” phrases like “no credit application refused” [They will accept a credit application from everyone, but they won’t approve everyone’s credit if they don’t like your application].
As bad and unethical as this kind of advertising is, it is not illegal and it is not an out and out lie. If a dealer made the above statements under oath, she would not go to jail for perjury. I was made aware of a direct mail advertisement recently that crossed over this line. It was a “personal letter” written by the general manager of a local dealership to owners of a particular make of car imploring those owners to sell their used car to this dealer. Several of my customers called me about this and some sent me the letter that they received.
This dealership’s general manager explained that she had stopped buying cars at the auto auctions to protect her used car customers from buying “Katrina flood cars”. Because she couldn’t buy cars from the auction, she therefore had to buy cars directly from the public. She also promised to pay “over book” for these cars because she was desperate for used cars. She didn’t comment about the higher price she would have to charge her used car customers for these cars that she paid so much money for.
I did a little checking on this and found out that this dealer rarely ever bought cars from the auction (just 5 so far in 2007). This general manager said that she normally bought over 200 cars a month from auctions. This is simply not so. This dealership doesn’t sell anywhere near 200 used cars per month and they trade in more used cars on their new cars than they can sell. In fact, they sell a lot of used cars at the auction because they cannot retail them.
The proof of the Katrina flood car problem was an article inserted in the envelope from a company named CarFax, whose business is researching the history of used cars for evidence of flood damage, collision, etc. My dealership and all responsible car dealerships screen all of their used cars with CarFax before they buy them or sell them to the public. The responsible auctions also screen their cars for problems like flood damage and do not sell cars like this at their auctions. If one should slip by the checks, the dealer could return the car to the auction.
This letter is simply a ploy to get you “in the door” based on a totally false premise. This general manager’s goal is to sell you a new or used car. They can and will offer you “over book” if you trade your used car in for new or used car because they can mark up the purchase price high enough to make it look like you are getting a great price for your trade-in. If you will not buy a car from them, they have no choice except to offer you as much below book for your car as they can get away with.
The bottom line is that the general manager of this dealership premeditatedly and deliberately made up a story to fool you and other potential car owners to come into her dealership. How can she get away with this? For one thing, direct mail advertising gets far less scrutiny than TV, radio, or newspaper. Also, because this is not directly an advertisement for new cars, the manufacturer will likely not get involved. The public who reads this letter doesn’t have the inside knowledge to know that they are reading a fairy tale written by a wicked queen that has a very bad ending.
As bad and unethical as this kind of advertising is, it is not illegal and it is not an out and out lie. If a dealer made the above statements under oath, she would not go to jail for perjury. I was made aware of a direct mail advertisement recently that crossed over this line. It was a “personal letter” written by the general manager of a local dealership to owners of a particular make of car imploring those owners to sell their used car to this dealer. Several of my customers called me about this and some sent me the letter that they received.
This dealership’s general manager explained that she had stopped buying cars at the auto auctions to protect her used car customers from buying “Katrina flood cars”. Because she couldn’t buy cars from the auction, she therefore had to buy cars directly from the public. She also promised to pay “over book” for these cars because she was desperate for used cars. She didn’t comment about the higher price she would have to charge her used car customers for these cars that she paid so much money for.
I did a little checking on this and found out that this dealer rarely ever bought cars from the auction (just 5 so far in 2007). This general manager said that she normally bought over 200 cars a month from auctions. This is simply not so. This dealership doesn’t sell anywhere near 200 used cars per month and they trade in more used cars on their new cars than they can sell. In fact, they sell a lot of used cars at the auction because they cannot retail them.
The proof of the Katrina flood car problem was an article inserted in the envelope from a company named CarFax, whose business is researching the history of used cars for evidence of flood damage, collision, etc. My dealership and all responsible car dealerships screen all of their used cars with CarFax before they buy them or sell them to the public. The responsible auctions also screen their cars for problems like flood damage and do not sell cars like this at their auctions. If one should slip by the checks, the dealer could return the car to the auction.
This letter is simply a ploy to get you “in the door” based on a totally false premise. This general manager’s goal is to sell you a new or used car. They can and will offer you “over book” if you trade your used car in for new or used car because they can mark up the purchase price high enough to make it look like you are getting a great price for your trade-in. If you will not buy a car from them, they have no choice except to offer you as much below book for your car as they can get away with.
The bottom line is that the general manager of this dealership premeditatedly and deliberately made up a story to fool you and other potential car owners to come into her dealership. How can she get away with this? For one thing, direct mail advertising gets far less scrutiny than TV, radio, or newspaper. Also, because this is not directly an advertisement for new cars, the manufacturer will likely not get involved. The public who reads this letter doesn’t have the inside knowledge to know that they are reading a fairy tale written by a wicked queen that has a very bad ending.
Friday, June 08, 2007
Should I Buy a Car or Have a Colonoscopy?
If you are over 55, you should have had a colonoscopy. If you haven’t, call your doctor because this could save your life. It did mine, but that’s another story. I had another colonoscopy yesterday and I have to tell you that it’s a very unpleasant experience, mainly from the mental anguish anticipation and the discomfort of the preparation the previous day. I had a lot of time to think about my procedure and I started thinking about how this experience parallels that of buying a car. It’s something you must do and has a very good benefit, but you dread the process.
This column, my 39th for Hometown News, has consisted mainly of suggestions and inside information that can make your new or used car buying experience less of a fearful occasion. If this is the first column of mine you have read, you can read all of them on my Blog, http://www.earlstewartoncars.com/. Some of the titles/subjects are “Always Get an Out the Door Price”, “Bait and Switch Advertising”, “Beware of Deceptive Internet Car Pricing”, “Beware of Direct Mail Car Advertising”, “Buying a Car When You Have a Credit Problem”, “Eight Steps to Ensure You Are Buying the Best Car for the Best Price”, “List Price and MSRP Might Not Be the Same”, “Negotiating to Buy a Car”, “Open Letter to Florida Car Dealers” (I, II, III, and IV), “Shop Your Financing and Trade”, “Should I Buy My Car at the End of the Lease?”, “Should I Lease or Buy my Next Car?”, “Should I Pay Cash or Finance My Next Car?”, “Should I Trade in My Old Car or Sell it Myself”, “Tell Your Car Dealer to be Nice”, “The Right Used Car is a Better Buy than a New Car”, “Translating Misleading Car Ads”, “What is the True Cost of that New Car?”, “What to do if You Are Treated Badly by a Car Dealer”, “When is a Car Sale Not a Car Sale?”, and “The Internet Price is the Lowest Price for a New Car”.
Almost every one of these articles originated from my customers’ and others’ experiences when buying cars from other car dealers. I get a lot of calls from people who have never bought a car from me. They call to tell me of their bad experience with another dealer and, when I get several calls on the same subject, I write a column on it. People often call me asking for advice or assistance after they have already bought, which is “closing the barn door after the horse is gone.” On more than one occasion I have called car dealers asking them to consider undoing a wrong they have caused one of their customers. I have to confess that I am “batting zero” on this effort. I won’t give up, however. I just made another call this afternoon on behalf of a customer whose installment sales contract, signed by her and the dealership had a higher interest rate than a second contract that the dealer sent to the lender. The customer told me she signed only one contract, the one she took home a copy of.
One thing that amazes me about these weekly columns that I have been writing for almost a year is that no car dealer has ever called me to complain or for any other reason. I have not been sued either. I think that says something about the truth of my articles. I’m not a lawyer, but I do know that you can’t successfully sue somebody for libel or slander if they write or say the truth. I know of one car dealer who threatened to cancel her advertising in the PB Post because she thought it owned the Hometown News. I am puzzled why not one single dealer would call me just out of curiosity. I don’t have a secretary and I don’t screen any of my calls…nor do any of my employees. They do know how successful my dealership is and how fast my sales are growing. They know that I am selling a lot of their former customers. Many of these new customers tell me how they told the other dealers why they chose to take their business elsewhere. I believe that before too much longer we will see some changes in the way other car dealers do business even if they refuse to call me, as I have repeatedly invited them to do. Sooner or later they will understand that treating your customers with courtesy and integrity is just plain good business.
I apologize for the 3 repeat columns. I am in the midst of move from to my new house and my computers have been out of commission until a few minutes ago. Next week I will be back in the swing of things with a fresh column.
This column, my 39th for Hometown News, has consisted mainly of suggestions and inside information that can make your new or used car buying experience less of a fearful occasion. If this is the first column of mine you have read, you can read all of them on my Blog, http://www.earlstewartoncars.com/. Some of the titles/subjects are “Always Get an Out the Door Price”, “Bait and Switch Advertising”, “Beware of Deceptive Internet Car Pricing”, “Beware of Direct Mail Car Advertising”, “Buying a Car When You Have a Credit Problem”, “Eight Steps to Ensure You Are Buying the Best Car for the Best Price”, “List Price and MSRP Might Not Be the Same”, “Negotiating to Buy a Car”, “Open Letter to Florida Car Dealers” (I, II, III, and IV), “Shop Your Financing and Trade”, “Should I Buy My Car at the End of the Lease?”, “Should I Lease or Buy my Next Car?”, “Should I Pay Cash or Finance My Next Car?”, “Should I Trade in My Old Car or Sell it Myself”, “Tell Your Car Dealer to be Nice”, “The Right Used Car is a Better Buy than a New Car”, “Translating Misleading Car Ads”, “What is the True Cost of that New Car?”, “What to do if You Are Treated Badly by a Car Dealer”, “When is a Car Sale Not a Car Sale?”, and “The Internet Price is the Lowest Price for a New Car”.
Almost every one of these articles originated from my customers’ and others’ experiences when buying cars from other car dealers. I get a lot of calls from people who have never bought a car from me. They call to tell me of their bad experience with another dealer and, when I get several calls on the same subject, I write a column on it. People often call me asking for advice or assistance after they have already bought, which is “closing the barn door after the horse is gone.” On more than one occasion I have called car dealers asking them to consider undoing a wrong they have caused one of their customers. I have to confess that I am “batting zero” on this effort. I won’t give up, however. I just made another call this afternoon on behalf of a customer whose installment sales contract, signed by her and the dealership had a higher interest rate than a second contract that the dealer sent to the lender. The customer told me she signed only one contract, the one she took home a copy of.
One thing that amazes me about these weekly columns that I have been writing for almost a year is that no car dealer has ever called me to complain or for any other reason. I have not been sued either. I think that says something about the truth of my articles. I’m not a lawyer, but I do know that you can’t successfully sue somebody for libel or slander if they write or say the truth. I know of one car dealer who threatened to cancel her advertising in the PB Post because she thought it owned the Hometown News. I am puzzled why not one single dealer would call me just out of curiosity. I don’t have a secretary and I don’t screen any of my calls…nor do any of my employees. They do know how successful my dealership is and how fast my sales are growing. They know that I am selling a lot of their former customers. Many of these new customers tell me how they told the other dealers why they chose to take their business elsewhere. I believe that before too much longer we will see some changes in the way other car dealers do business even if they refuse to call me, as I have repeatedly invited them to do. Sooner or later they will understand that treating your customers with courtesy and integrity is just plain good business.
I apologize for the 3 repeat columns. I am in the midst of move from to my new house and my computers have been out of commission until a few minutes ago. Next week I will be back in the swing of things with a fresh column.
Monday, June 04, 2007
TIPS ON NEGOTIATING TO BUY A CAR
Buying a new or used car is one of the last bastions of the negotiated price. In some countries, negotiation is fairly common in stores, but in America most products are sold at a fixed price. Some of us are simply not comfortable negotiating and most of us are not very good at it.
As I have said in previous columns, the best way to buy a new or used car is on the Internet. You can do your research on which car is the best to suit your needs, get guidance on what kind of price you can expect to pay, and finally get quotes from several dealerships on that specific car. However, everybody is not “Internet savvy” and if you are not, you may find it necessary to walk into a car dealership and negotiate for the lowest price.
If you are not comfortable with negotiation, the best advice I can give you is to bring someone along with you who is. Car sales people and sales managers are trained experts in negotiation. This is how they make their living. Here are some tips for you if you decide that you want to negotiate the best price on a car.
(1) If you have a trade-in, keep that separate from the negotiation. Negotiate the best price on the car you are buying and then negotiate the best price you can get for your trade-in. Don’t fall for the old “over allowance” on your trade-in ruse. This is where the dealer makes up the price of car you are buying higher so that he can make you think you are getting more for your trade-in.
(2) Never buy a car on payments alone. Always negotiate the best price you can for the car you are buying and then calculate your best payment after you have negotiated for the best interest rate.
(3) Be sure you understand how the dealer arrived at his retail price. Federal law dictates that a Monroney label be affixed to every vehicle with a manufacturer’s suggested retail price. Many dealers mark that up with another label, often referred to as a “Market Adjustment Addendum”. This markup can be several thousands of dollars.
(4) Expect the first price you are given to be substantially higher than what you can buy the car for. Sales people and sales managers are trained to “start high because you can always come down”. Don’t be afraid to offer substantially less than the initial asking price. You should do what the car salesman does, but in reverse…”start low because you can always go higher”. If the salesman accepts your first offer, you probably offered too much. In fact, shrewd car sales people are trained to always ask for more money, even if the offer is good one. This is because they don’t want to “scare off the customer” by telegraphing to the customer that his offer was high.
(5) If the sales person asks you for a deposit before he will begin negotiating, determine whether the deposit is refundable. Florida law requires a nonrefundable deposit be disclosed in writing on the receipt. If this is printed on your receipt, insist that this be waived in writing on your buyer’s order. If the dealer will not agree to this, be warned that he may be able to keep your deposit if you change your mind about buying the car.
(6) Be prepared for a lot of “back and forth” when the salesman takes your first offer back to the manager. When you get close to finding a mutually acceptable price, the manager himself will often come to talk to you. Don’t be intimidated and stick to your guns even when they tell you this is “positively, absolutely the lowest price”. Even if you think you do have the lowest price, a great strategy is to get up, walk out of the showroom, and get into your car to drive away. This will often precipitate an even better price. When you try this, the worst case scenario is that you really do drive home, but you can always return and buy the car the next day for the last price they quoted you. They may tell you that you have to buy today, but nine times out of ten that is a bluff. The only exception is when there are factory rebates and incentive expiring.
(7) The last day of the month really is a good time to buy a car. The salesman’s bonus money is maximized, the factory incentives are in effect, the managers are desperate to make their quotas, and it is the one time of the month when the buyer has the best edge in the negotiation.
Caveat emptor “let the buyer beware” could have been written specifically for what you can expect when you walk into a car dealership to negotiate the best price. You are up against some of the shrewdest, experienced negotiators anywhere. But, if you will follow my advice above, you should be able to hold your own and maybe even get a great deal.
As I have said in previous columns, the best way to buy a new or used car is on the Internet. You can do your research on which car is the best to suit your needs, get guidance on what kind of price you can expect to pay, and finally get quotes from several dealerships on that specific car. However, everybody is not “Internet savvy” and if you are not, you may find it necessary to walk into a car dealership and negotiate for the lowest price.
If you are not comfortable with negotiation, the best advice I can give you is to bring someone along with you who is. Car sales people and sales managers are trained experts in negotiation. This is how they make their living. Here are some tips for you if you decide that you want to negotiate the best price on a car.
(1) If you have a trade-in, keep that separate from the negotiation. Negotiate the best price on the car you are buying and then negotiate the best price you can get for your trade-in. Don’t fall for the old “over allowance” on your trade-in ruse. This is where the dealer makes up the price of car you are buying higher so that he can make you think you are getting more for your trade-in.
(2) Never buy a car on payments alone. Always negotiate the best price you can for the car you are buying and then calculate your best payment after you have negotiated for the best interest rate.
(3) Be sure you understand how the dealer arrived at his retail price. Federal law dictates that a Monroney label be affixed to every vehicle with a manufacturer’s suggested retail price. Many dealers mark that up with another label, often referred to as a “Market Adjustment Addendum”. This markup can be several thousands of dollars.
(4) Expect the first price you are given to be substantially higher than what you can buy the car for. Sales people and sales managers are trained to “start high because you can always come down”. Don’t be afraid to offer substantially less than the initial asking price. You should do what the car salesman does, but in reverse…”start low because you can always go higher”. If the salesman accepts your first offer, you probably offered too much. In fact, shrewd car sales people are trained to always ask for more money, even if the offer is good one. This is because they don’t want to “scare off the customer” by telegraphing to the customer that his offer was high.
(5) If the sales person asks you for a deposit before he will begin negotiating, determine whether the deposit is refundable. Florida law requires a nonrefundable deposit be disclosed in writing on the receipt. If this is printed on your receipt, insist that this be waived in writing on your buyer’s order. If the dealer will not agree to this, be warned that he may be able to keep your deposit if you change your mind about buying the car.
(6) Be prepared for a lot of “back and forth” when the salesman takes your first offer back to the manager. When you get close to finding a mutually acceptable price, the manager himself will often come to talk to you. Don’t be intimidated and stick to your guns even when they tell you this is “positively, absolutely the lowest price”. Even if you think you do have the lowest price, a great strategy is to get up, walk out of the showroom, and get into your car to drive away. This will often precipitate an even better price. When you try this, the worst case scenario is that you really do drive home, but you can always return and buy the car the next day for the last price they quoted you. They may tell you that you have to buy today, but nine times out of ten that is a bluff. The only exception is when there are factory rebates and incentive expiring.
(7) The last day of the month really is a good time to buy a car. The salesman’s bonus money is maximized, the factory incentives are in effect, the managers are desperate to make their quotas, and it is the one time of the month when the buyer has the best edge in the negotiation.
Caveat emptor “let the buyer beware” could have been written specifically for what you can expect when you walk into a car dealership to negotiate the best price. You are up against some of the shrewdest, experienced negotiators anywhere. But, if you will follow my advice above, you should be able to hold your own and maybe even get a great deal.
The Owner of the Car Dealership is Accountable
Congress passed a law a few years ago that really shook up publicly owned companies. It’s called Sarbanes-Oxley, named after the Congressmen who sponsored the bill. Basically this law says that the CEO and other high echelon management of a public owned company cannot get of the hook from wrong doings because he claims he didn’t know what his employees were doing. I believe the same rules should apply to all businesses, even if their stock is not publicly held. The boss should always be held accountable for the actions of his employees and this should apply especially for car dealerships.
Most of the employees that the customer comes into contact with in a car dealership are paid on commission. Those employees get a percentage of the profit that the company makes on the transaction. Car sales people, service sales people (also called service advisors or assistant service managers), parts sales people, and the mechanical technicians who work on your car are mostly all paid on commission. This method of pay tilts the relationship between the customer and employee in somewhat of an adversarial manner. The employee wants the profit to be as high as possible but the customer wants it to be low. In a car dealership that has talented, fully engaged, and ethical management, this potentially adversarial relationship is kept in a fair balance. Without the oversight of upper and middle management and careful hiring practices, some employees will exploit a customer to increase his commission.
What brought the subject of this column to mind was a call I received yesterday from a 78 year old widow from Ft. Pierce. She called to thank me for writing my column and to tell me that she wished she had read some of my columns before she bought her 2005 used Mazda. This was the first car she had bought on her own. Her husband had always taken on this responsibility. She paid the dealership a huge profit on her purchase. She was sold a maintenance package that she believed cost only $25 but it really was $2,500. She was rushed to sign the papers at night because the dealership was closing. In the morning, when she realized the mistake, she drove back to the dealership and asked to back out the sale but was told it was too late. She was told she had signed all the papers and that they had already sold her trade-in even though she had not given them the title. When she asked to speak to the General Manager, three different employees identified themselves as the General Manager. I get a lot of sad calls like this.
The owner of that dealership should know what’s going on. I’m giving him the benefit of the doubt by saying that he doesn’t know because if he does know it’s even worse. The owner should look at the big picture and the long term view of his business. You can take advantage of customers and benefit in the short run, but you eventually “pay the piper” when your bad reputation spreads far enough. Most of the bad things I hear about car dealers from their customers are not illegal things. They are simply unethical and not the way one human being should treat another. Refusing to refund the money of an elderly, widow after she realized that she had been taken advantage of is not illegal, but it sure “stinks”. Jim Press is the top executive for Toyota over all of North America and he is also the only non-Japanese to occupy a place on Toyota’s board of directors. He was quoted in the book, The Toyota Way by Jeffrey Liker, as saying “It’s what you do for a customer when you don’t owe him anything that is the true measure of character. It’s like sticking up for somebody who can’t defend himself”. I really like this quote and I have it engraved on a plaque which I give out each month to the employee who wins the “Above and Beyond Award”. This award goes to our employee who does something for her customer above and beyond what the customer would have expected.
If you have a bad dealing with your car dealership, do your best to contact the owner. This is impossible with publicly held dealerships like AutoNation and United Auto Group, but you should be able to talk to their General Managers. If it’s privately owned dealership, don’t give up until you see the owner.
Most of the employees that the customer comes into contact with in a car dealership are paid on commission. Those employees get a percentage of the profit that the company makes on the transaction. Car sales people, service sales people (also called service advisors or assistant service managers), parts sales people, and the mechanical technicians who work on your car are mostly all paid on commission. This method of pay tilts the relationship between the customer and employee in somewhat of an adversarial manner. The employee wants the profit to be as high as possible but the customer wants it to be low. In a car dealership that has talented, fully engaged, and ethical management, this potentially adversarial relationship is kept in a fair balance. Without the oversight of upper and middle management and careful hiring practices, some employees will exploit a customer to increase his commission.
What brought the subject of this column to mind was a call I received yesterday from a 78 year old widow from Ft. Pierce. She called to thank me for writing my column and to tell me that she wished she had read some of my columns before she bought her 2005 used Mazda. This was the first car she had bought on her own. Her husband had always taken on this responsibility. She paid the dealership a huge profit on her purchase. She was sold a maintenance package that she believed cost only $25 but it really was $2,500. She was rushed to sign the papers at night because the dealership was closing. In the morning, when she realized the mistake, she drove back to the dealership and asked to back out the sale but was told it was too late. She was told she had signed all the papers and that they had already sold her trade-in even though she had not given them the title. When she asked to speak to the General Manager, three different employees identified themselves as the General Manager. I get a lot of sad calls like this.
The owner of that dealership should know what’s going on. I’m giving him the benefit of the doubt by saying that he doesn’t know because if he does know it’s even worse. The owner should look at the big picture and the long term view of his business. You can take advantage of customers and benefit in the short run, but you eventually “pay the piper” when your bad reputation spreads far enough. Most of the bad things I hear about car dealers from their customers are not illegal things. They are simply unethical and not the way one human being should treat another. Refusing to refund the money of an elderly, widow after she realized that she had been taken advantage of is not illegal, but it sure “stinks”. Jim Press is the top executive for Toyota over all of North America and he is also the only non-Japanese to occupy a place on Toyota’s board of directors. He was quoted in the book, The Toyota Way by Jeffrey Liker, as saying “It’s what you do for a customer when you don’t owe him anything that is the true measure of character. It’s like sticking up for somebody who can’t defend himself”. I really like this quote and I have it engraved on a plaque which I give out each month to the employee who wins the “Above and Beyond Award”. This award goes to our employee who does something for her customer above and beyond what the customer would have expected.
If you have a bad dealing with your car dealership, do your best to contact the owner. This is impossible with publicly held dealerships like AutoNation and United Auto Group, but you should be able to talk to their General Managers. If it’s privately owned dealership, don’t give up until you see the owner.
Saturday, May 12, 2007
Open Letter to Florida Car Dealers V
Ethical Car Dealers Attract the Best Customers
Dear Florida Car Dealer:
In past columns I have “confessed” to advertising and employing sales tactics in years past that I am not proud of today. I hasten to say that I never did anything illegal, but 20 to 40 years ago my ethical standards were a lot lower than they are today. I evolved and my customers evolved. Consumers today are far better educated, informed, and demanding than those of three decades back. As my business practices, sales tactics, advertising, and I as an individual improved, I noticed a very interesting, positive parallel improvement in the kind of customers my company was attracting. It was a sort of a “push-pull” phenomenon. I needed to get better to meet the expectations of my customers and, as I improved, I attracted a better kind of customer.
Today, my customers are smarter, more affluent, better educated, and “nicer”. There’s a good reason for this. For one thing, my advertising is totally ethical and honest. I don’t advertise used cars for $99, I don’t advertise that, if you buy vehicle you can get a second one free, and I don’t advertise a car below cost knowing that there is only one available which is next to impossible for the customer to buy. When you advertise like this, you attract people who are uneducated, gullible, naive or expecting “something for nothing”. The smart, fair dealing customers who know that “there is no such thing as a free lunch” buy their cars from me. I don’t surprise my customers with a dealer fee/doc fee ranging up to $1,000 which is nothing more than profit to you. In fact, many of my customers were almost yours, until you tried to “slip in” your dealer fee. A lot of my service customers used to be your service customers until they discovered that you charge an extra 5% or 10% on their service bill and tried to justify it by calling it “sundry supplies”, “shop supplies” or “environmental impact fee”.
So, you ask, what’s so great about having smart, educated, affluent, and nice customers? Well, for one thing, I don’t get sued like you do and I don’t get nasty letters from the BBB, County Office of Consumer Affairs, and Florida Attorney General’s Office. The last time I was sued was about 7 years ago. Ironically, my customer’s lawyer sued me because I settled a dispute with his client (my customer). After he wrote me a letter saying he was suing me I called his customer on the phone, drove out to her home, sat down with her and her husband at her kitchen table and settled our differences over a cup of coffee. This lawyer sued me because I had deprived him of the fee he would have charged her if he could have sued me. It’s an ongoing saga after all these years. It’s too long a story to tell here, but I will write a column about it one day. I’m guessing that the car dealers who read this column (and I know you do) have at least a half dozen lawsuits going on all of the time.
Another great thing about having nicer, smarter, more affluent customers is that they treat my employees and me with courtesy and respect, just like we treat them. I love to walk into my dealership because customers smile and wave and even stop me to tell me how well they were treated. Customers, who don’t see me in person, know that all they have to do is pick up one of four red phones located in the showroom, service drive, next to the service cashier, and in the body shop to be in immediate personal contact with me. I even give my customers my business card with my home phone number and my cell phone number. Most of the calls that I get are complimentary, just like my personal encounters. You wouldn’t do what I do because you couldn’t. Your secretary screens your phone calls and you wouldn’t dare give your home or cell phone number to a customer. By the way, if you aren’t familiar with my dealership, I probably sell a lot more cars than you do…I average about 475 a month. I have a lot more customers than you, so it’s not like I’m a little rural car dealer who can get away with what I do because I have so few customers.
Here’s another benefit of having such nice, intelligent customers. They don’t have unrealistic expectations like your customers. Remember that you probably tricked your customer into coming in with your advertising. If it worked and your customer bought a car from you thinking that you really could give him $10,000 minimum trade allowance on his car which was really worth only $500, you have reinforced his unrealistically high expectations. In his future dealings with you, he will continue to believe that he can get “something for nothing”. When you finally have to tell him “no”, he’s going to be mad, maybe even sue you.
There are other benefits, too numerous to mention, of having such happy, nice customers. Wouldn’t you like to come to work in that environment? Just think, no more law suits, no more nasty letters from governmental agencies, no more threats from the factory about your customer satisfaction index, and you could walk right through your service department or through your showroom without fear of being accosted by an irate customer. If you would like to give this a try, I would love to discuss it with you personally at any time. This is my 5th open letter to car dealers in this newspaper and I have yet to receive the first phone call…just a few nasty, anonymous emails. Maybe you will be the first to call.
Sincerely,
Earl Stewart
Dear Florida Car Dealer:
In past columns I have “confessed” to advertising and employing sales tactics in years past that I am not proud of today. I hasten to say that I never did anything illegal, but 20 to 40 years ago my ethical standards were a lot lower than they are today. I evolved and my customers evolved. Consumers today are far better educated, informed, and demanding than those of three decades back. As my business practices, sales tactics, advertising, and I as an individual improved, I noticed a very interesting, positive parallel improvement in the kind of customers my company was attracting. It was a sort of a “push-pull” phenomenon. I needed to get better to meet the expectations of my customers and, as I improved, I attracted a better kind of customer.
Today, my customers are smarter, more affluent, better educated, and “nicer”. There’s a good reason for this. For one thing, my advertising is totally ethical and honest. I don’t advertise used cars for $99, I don’t advertise that, if you buy vehicle you can get a second one free, and I don’t advertise a car below cost knowing that there is only one available which is next to impossible for the customer to buy. When you advertise like this, you attract people who are uneducated, gullible, naive or expecting “something for nothing”. The smart, fair dealing customers who know that “there is no such thing as a free lunch” buy their cars from me. I don’t surprise my customers with a dealer fee/doc fee ranging up to $1,000 which is nothing more than profit to you. In fact, many of my customers were almost yours, until you tried to “slip in” your dealer fee. A lot of my service customers used to be your service customers until they discovered that you charge an extra 5% or 10% on their service bill and tried to justify it by calling it “sundry supplies”, “shop supplies” or “environmental impact fee”.
So, you ask, what’s so great about having smart, educated, affluent, and nice customers? Well, for one thing, I don’t get sued like you do and I don’t get nasty letters from the BBB, County Office of Consumer Affairs, and Florida Attorney General’s Office. The last time I was sued was about 7 years ago. Ironically, my customer’s lawyer sued me because I settled a dispute with his client (my customer). After he wrote me a letter saying he was suing me I called his customer on the phone, drove out to her home, sat down with her and her husband at her kitchen table and settled our differences over a cup of coffee. This lawyer sued me because I had deprived him of the fee he would have charged her if he could have sued me. It’s an ongoing saga after all these years. It’s too long a story to tell here, but I will write a column about it one day. I’m guessing that the car dealers who read this column (and I know you do) have at least a half dozen lawsuits going on all of the time.
Another great thing about having nicer, smarter, more affluent customers is that they treat my employees and me with courtesy and respect, just like we treat them. I love to walk into my dealership because customers smile and wave and even stop me to tell me how well they were treated. Customers, who don’t see me in person, know that all they have to do is pick up one of four red phones located in the showroom, service drive, next to the service cashier, and in the body shop to be in immediate personal contact with me. I even give my customers my business card with my home phone number and my cell phone number. Most of the calls that I get are complimentary, just like my personal encounters. You wouldn’t do what I do because you couldn’t. Your secretary screens your phone calls and you wouldn’t dare give your home or cell phone number to a customer. By the way, if you aren’t familiar with my dealership, I probably sell a lot more cars than you do…I average about 475 a month. I have a lot more customers than you, so it’s not like I’m a little rural car dealer who can get away with what I do because I have so few customers.
Here’s another benefit of having such nice, intelligent customers. They don’t have unrealistic expectations like your customers. Remember that you probably tricked your customer into coming in with your advertising. If it worked and your customer bought a car from you thinking that you really could give him $10,000 minimum trade allowance on his car which was really worth only $500, you have reinforced his unrealistically high expectations. In his future dealings with you, he will continue to believe that he can get “something for nothing”. When you finally have to tell him “no”, he’s going to be mad, maybe even sue you.
There are other benefits, too numerous to mention, of having such happy, nice customers. Wouldn’t you like to come to work in that environment? Just think, no more law suits, no more nasty letters from governmental agencies, no more threats from the factory about your customer satisfaction index, and you could walk right through your service department or through your showroom without fear of being accosted by an irate customer. If you would like to give this a try, I would love to discuss it with you personally at any time. This is my 5th open letter to car dealers in this newspaper and I have yet to receive the first phone call…just a few nasty, anonymous emails. Maybe you will be the first to call.
Sincerely,
Earl Stewart
Friday, May 04, 2007
Top 10 Ways to Get Shafted by a Car Dealer
(1) Believe the newspaper and TV ads. It never ceases to amaze me how outrageous and unbelievable the car dealers’ claims are. Just when I think that they can’t get any worse, I see one that tops them all. Last month, one dealer was advertising in the newspaper and TV that if you bought one vehicle from him you got a second for nothing. The “facts and fine print” would reveal that the first vehicle was a very expensive one with a huge markup of over $6,000 and the second vehicle was only the “use” of one for two years... a lease. My father always said, “If it sounds too good to be true, it probably isn’t true”. Astoundingly, the general manager of this dealership had the unmitigated gall to say on TV, “This is not a gimmick”!
(2) Buy a car on impulse on the first day you start shopping. Can you believe that this is the way most people buy cars? It truly is. There is something about a new car that excites people and appeals to them on an emotional level. People let their feelings short circuit their logical thought processes. Overcome that emotion that tells you that you must drive home that shiny new car right now. Go home and think about it. Talk it over with your spouse and friends. Research the model of car you looked at and the price on the Internet. Always drive the car you chose before you sign any papers. You should take at least a week or two in the decision making process before you buy a car.
(3) Trade your old car in to the dealer you buy from without shopping its value. Most people have no idea what their trade-in is worth when they come in to buy a new car. They rely entirely on the appraisal by the selling dealer. The dealer can make it appear that he is giving you a lot of money for your trade by taking some of the high markup on the new car and showing it as part of the appraisal value. Check Kelly Blue Book (kbb.com) and Edumnds.com on the Internet. Get at least 3 bids from other dealers of the same make for your trade. Make the purchase of the new car and the sale of your trade two separate transactions. Remember that you do get a sales tax break by trading in your car to the dealer you buy from.
(4) Use the dealer’s financing without checking with your bank or credit union. Shop for the best price on your financing just like you shop for the best price on your trade-in and the best price on new your car.
(5) Believe it when they say “This low price is good today only”. This is one of the favorite ruses used by car sales people and dealers. In 99% of the cases, you can buy that car for the same or an even lower price later. The only time that you can’t is when factory incentives expire on a certain date, typically at the end of the month. If that is the claim, demand to see the written factory incentive by the manufacturer.
(6) Agree to “Make me a written offer with a deposit and I will submit it to my manager”. This is S.O.P at most car dealerships. This is to get you psychologically engaged in the buying process. Once you have signed a buyer’s order and written out a check, you will remain in the dealership for a while and are more likely to buy. The salesman knows that. Insist on getting their best price on the car you have selected. You should never make the first offer. Once you have their price, compare it with at least 3 other prices from other dealers on the same make and model.
(7) Agree to "Why not take this new car home and see how you like it?". This is the famous “puppy dog” technique so named because once you take a puppy dog home overnight, who has the heart to return it the next day? You, your neighbors, and friends will see that shiny new car parked in your driveway. It sure looks good! How can you explain to anybody that you didn’t buy it?
(8) Commit to “I’ll buy the car if you can get my monthly payments below $___.__” Most of us tend to think in terms of our monthly budgets. We might feel that we can afford a new car as long as it costs us less than $350 per month, but there is a big difference between $350 per month for 36 months and $350 per month for 72 months. I recommend that you finance a car for no more than 42 months, preferably 36.
(9) Believe “You have my word on that.” Be absolutely sure that every promise or commitment made to you by your sales person is in writing and signed by a manager. That salesman may not work there when you have occasion to ask for that “free loaner car” that he promised you anytime you bring your car in for service.
(10) Accept that “All dealers charge a dealer fee and we can’t remove it from the invoice.” In fact, all dealers do not charge a dealer fee. I don’t. But unfortunately most do charge this “gotcha” ranging from $495 to $1,000. It is true that Florida law (which should prohibit dealer fees entirely) requires that the dealer fee appear on all invoices. If you charge just one customer a dealer fee, you must charge everybody. The state legislators, in their infinite wisdom, decided if a car dealer is going to take advantage of even one buyer, he must take advantage of all of the buyers….never discriminate. But the loophole in this stupid law is for you to demand that the dealer reduce the price of the car by the amount of the dealer fee, making it a wash.
(2) Buy a car on impulse on the first day you start shopping. Can you believe that this is the way most people buy cars? It truly is. There is something about a new car that excites people and appeals to them on an emotional level. People let their feelings short circuit their logical thought processes. Overcome that emotion that tells you that you must drive home that shiny new car right now. Go home and think about it. Talk it over with your spouse and friends. Research the model of car you looked at and the price on the Internet. Always drive the car you chose before you sign any papers. You should take at least a week or two in the decision making process before you buy a car.
(3) Trade your old car in to the dealer you buy from without shopping its value. Most people have no idea what their trade-in is worth when they come in to buy a new car. They rely entirely on the appraisal by the selling dealer. The dealer can make it appear that he is giving you a lot of money for your trade by taking some of the high markup on the new car and showing it as part of the appraisal value. Check Kelly Blue Book (kbb.com) and Edumnds.com on the Internet. Get at least 3 bids from other dealers of the same make for your trade. Make the purchase of the new car and the sale of your trade two separate transactions. Remember that you do get a sales tax break by trading in your car to the dealer you buy from.
(4) Use the dealer’s financing without checking with your bank or credit union. Shop for the best price on your financing just like you shop for the best price on your trade-in and the best price on new your car.
(5) Believe it when they say “This low price is good today only”. This is one of the favorite ruses used by car sales people and dealers. In 99% of the cases, you can buy that car for the same or an even lower price later. The only time that you can’t is when factory incentives expire on a certain date, typically at the end of the month. If that is the claim, demand to see the written factory incentive by the manufacturer.
(6) Agree to “Make me a written offer with a deposit and I will submit it to my manager”. This is S.O.P at most car dealerships. This is to get you psychologically engaged in the buying process. Once you have signed a buyer’s order and written out a check, you will remain in the dealership for a while and are more likely to buy. The salesman knows that. Insist on getting their best price on the car you have selected. You should never make the first offer. Once you have their price, compare it with at least 3 other prices from other dealers on the same make and model.
(7) Agree to "Why not take this new car home and see how you like it?". This is the famous “puppy dog” technique so named because once you take a puppy dog home overnight, who has the heart to return it the next day? You, your neighbors, and friends will see that shiny new car parked in your driveway. It sure looks good! How can you explain to anybody that you didn’t buy it?
(8) Commit to “I’ll buy the car if you can get my monthly payments below $___.__” Most of us tend to think in terms of our monthly budgets. We might feel that we can afford a new car as long as it costs us less than $350 per month, but there is a big difference between $350 per month for 36 months and $350 per month for 72 months. I recommend that you finance a car for no more than 42 months, preferably 36.
(9) Believe “You have my word on that.” Be absolutely sure that every promise or commitment made to you by your sales person is in writing and signed by a manager. That salesman may not work there when you have occasion to ask for that “free loaner car” that he promised you anytime you bring your car in for service.
(10) Accept that “All dealers charge a dealer fee and we can’t remove it from the invoice.” In fact, all dealers do not charge a dealer fee. I don’t. But unfortunately most do charge this “gotcha” ranging from $495 to $1,000. It is true that Florida law (which should prohibit dealer fees entirely) requires that the dealer fee appear on all invoices. If you charge just one customer a dealer fee, you must charge everybody. The state legislators, in their infinite wisdom, decided if a car dealer is going to take advantage of even one buyer, he must take advantage of all of the buyers….never discriminate. But the loophole in this stupid law is for you to demand that the dealer reduce the price of the car by the amount of the dealer fee, making it a wash.
Monday, April 30, 2007
MY TRIBUTE TO THE GREATEST “CAR GUY”
Jim Moran died at 88 on Tuesday morning, April 24, 2007. Jim Moran is a common, Irish name but this Jim Moran was a very uncommon Irishman. He was the founder of the JM Family in Deerfield Beach which is made up of several companies, the largest being Southeast Toyota. They distribute new Toyotas to all the dealers in the southeast USA. His company was just ranked the 18th largest privately owned company in America. He was a multibillionaire when he died.
I first met Jim Moran at a meeting for Pontiac dealers in Ft. Lauderdale over 40 years ago. Jim had recently moved down from Chicago where he had sold Courtesy Ford, which he built to become the largest Ford dealership in the world. Previously he had done the same with a Hudson dealership. Jim grew up in Chicago. His parents were poor but he worked hard at various jobs, saving his money until he could buy a Sinclair gas station. He began selling a few used cars from his gas station and that’s what motivated him to buy a small Hudson dealership.
The reason Jim moved to Florida in the early sixties, was his doctor telling him that he had cancer and as little as six months to live. After he sold his Ford dealership and moved to Florida, he found out his doctor was mistaken. So, Jim got back into the car business. First he bought a small Pontiac dealership in Homestead. He soon sold that for a nice profit and built the biggest Pontiac dealership in the USA in Hollywood, Florida. He set his sights on his next project to be the first Volkswagen dealership on Miami Beach. Back in the sixties, the VW franchise was the most profitable franchise around. Volkswagen turned him down, so he took the money he had planned to invest in the VW dealership, $100,000, and bought a distributorship for a Japanese car that very few people had even heard of, named Toyota. The rest is history.
Some will say that Jim Moran was just plain lucky. Nobody wanted a Toyota distributorship in the sixties. The quality of Toyotas at that time was terrible and big American cars dominated the market. He may have been lucky, but he was also very, very smart, worked very hard, and I have never known anyone so focused on success. Beyond this, he was blessed with the God given talents of extreme charisma and the ability to find, train, and motivate great people to work for him. He built a network of dealers to sell Toyotas in Florida, Georgia, Alabama, South Carolina, and North Carolina. He also built a support structure for the dealers including a finance company, insurance company, car accessory company, JM Lexus (the largest Lexus dealership in the world) and a port preparation company. His other companies are now nationwide and service all makes of cars, not just Toyota.
I like to think I had a special relationship with Jim Moran. We were both “just a couple of Pontiac dealers” when we met. I bought my Toyota dealership in North Palm Beach/Lake Park in 1975. Those were the “wild and wooly days” in the car business. Jim Moran was an advertising genius as well as a car genius. His marketing and advertising techniques were copied by the Japanese to increase the sales of Toyotas in the rest of the USA when they realized that Southeast Toyota was outselling every other region. The “Toyotathon” was invented by Jim Moran. Top Toyota Japanese management had huge respect for Jim Moran. “Moran san”, they called him. He coached them on styling and designing Toyotas to suit American taste. He often flew to Tokyo in his private Gulfstream IV or V Jet to meet with the top management of Toyota. Jim Press, the highest ranking American in Toyota and the only non-Japanese member of Toyota’s board of directors was sent to work for Jim Moran at Southeast Toyota while he was being groomed for top management. It is a fact that Jim Moran positively and significantly affected the success of Toyota in America.
This is one of literally hundreds of eulogies that will be written about this man. Most will paint him to be perfect, a man for all seasons, and all things to all people. They will write about his charitable contributions, his family, and all of them good things he did during his life, which were significant. Because I knew Jim for a longer time than most and because I knew him very early in his career, I have a different perspective. Back in those days, the rules of the game were a little looser than they are today. There were fewer laws and regulations. It was the Wild, Wild West when it came to marketing cars. Jim Moran was blessed with incredible talents, including charisma, drive, and intelligence. He was the most competitive man I have ever known, the Michael Jordan or Tiger Woods of the car business. Like all great performers, he loved doing what he did better than anything…yes anything. Everything else in this great man’s life was secondary to his becoming the very biggest and best Hudson Dealer, Ford Dealer, Pontiac Dealer, Lexus Dealer, or Toyota Distributor in the world. Underneath the smooth facade was always the rough, tough Chicago Irishman. I don’t believe it is possible to be the best in the world at anything unless you are blessed, or is it cursed, with this kind of focus and ambition.
The last conversation I had with Jim Moran was his phone call to me about a year and a half ago. He had heard that I had just recovered from colon cancer surgery and called to ask how I was doing and wish me well. He reminded me about his doctors in Chicago telling him that he had cancer and as little as six months to live more than 40 years ago. He congratulated me on my dealership’s great increase in sales since I moved into my new, much larger dealership. Then he said to me, “Earl, I’ve been telling to build that new dealership for the last ten years!” We both laughed.
I am proud and lucky to have known Jim Moran. I learned a huge amount from him and I would have to say that he had a greater influence on my business life than anyone except my father.
I first met Jim Moran at a meeting for Pontiac dealers in Ft. Lauderdale over 40 years ago. Jim had recently moved down from Chicago where he had sold Courtesy Ford, which he built to become the largest Ford dealership in the world. Previously he had done the same with a Hudson dealership. Jim grew up in Chicago. His parents were poor but he worked hard at various jobs, saving his money until he could buy a Sinclair gas station. He began selling a few used cars from his gas station and that’s what motivated him to buy a small Hudson dealership.
The reason Jim moved to Florida in the early sixties, was his doctor telling him that he had cancer and as little as six months to live. After he sold his Ford dealership and moved to Florida, he found out his doctor was mistaken. So, Jim got back into the car business. First he bought a small Pontiac dealership in Homestead. He soon sold that for a nice profit and built the biggest Pontiac dealership in the USA in Hollywood, Florida. He set his sights on his next project to be the first Volkswagen dealership on Miami Beach. Back in the sixties, the VW franchise was the most profitable franchise around. Volkswagen turned him down, so he took the money he had planned to invest in the VW dealership, $100,000, and bought a distributorship for a Japanese car that very few people had even heard of, named Toyota. The rest is history.
Some will say that Jim Moran was just plain lucky. Nobody wanted a Toyota distributorship in the sixties. The quality of Toyotas at that time was terrible and big American cars dominated the market. He may have been lucky, but he was also very, very smart, worked very hard, and I have never known anyone so focused on success. Beyond this, he was blessed with the God given talents of extreme charisma and the ability to find, train, and motivate great people to work for him. He built a network of dealers to sell Toyotas in Florida, Georgia, Alabama, South Carolina, and North Carolina. He also built a support structure for the dealers including a finance company, insurance company, car accessory company, JM Lexus (the largest Lexus dealership in the world) and a port preparation company. His other companies are now nationwide and service all makes of cars, not just Toyota.
I like to think I had a special relationship with Jim Moran. We were both “just a couple of Pontiac dealers” when we met. I bought my Toyota dealership in North Palm Beach/Lake Park in 1975. Those were the “wild and wooly days” in the car business. Jim Moran was an advertising genius as well as a car genius. His marketing and advertising techniques were copied by the Japanese to increase the sales of Toyotas in the rest of the USA when they realized that Southeast Toyota was outselling every other region. The “Toyotathon” was invented by Jim Moran. Top Toyota Japanese management had huge respect for Jim Moran. “Moran san”, they called him. He coached them on styling and designing Toyotas to suit American taste. He often flew to Tokyo in his private Gulfstream IV or V Jet to meet with the top management of Toyota. Jim Press, the highest ranking American in Toyota and the only non-Japanese member of Toyota’s board of directors was sent to work for Jim Moran at Southeast Toyota while he was being groomed for top management. It is a fact that Jim Moran positively and significantly affected the success of Toyota in America.
This is one of literally hundreds of eulogies that will be written about this man. Most will paint him to be perfect, a man for all seasons, and all things to all people. They will write about his charitable contributions, his family, and all of them good things he did during his life, which were significant. Because I knew Jim for a longer time than most and because I knew him very early in his career, I have a different perspective. Back in those days, the rules of the game were a little looser than they are today. There were fewer laws and regulations. It was the Wild, Wild West when it came to marketing cars. Jim Moran was blessed with incredible talents, including charisma, drive, and intelligence. He was the most competitive man I have ever known, the Michael Jordan or Tiger Woods of the car business. Like all great performers, he loved doing what he did better than anything…yes anything. Everything else in this great man’s life was secondary to his becoming the very biggest and best Hudson Dealer, Ford Dealer, Pontiac Dealer, Lexus Dealer, or Toyota Distributor in the world. Underneath the smooth facade was always the rough, tough Chicago Irishman. I don’t believe it is possible to be the best in the world at anything unless you are blessed, or is it cursed, with this kind of focus and ambition.
The last conversation I had with Jim Moran was his phone call to me about a year and a half ago. He had heard that I had just recovered from colon cancer surgery and called to ask how I was doing and wish me well. He reminded me about his doctors in Chicago telling him that he had cancer and as little as six months to live more than 40 years ago. He congratulated me on my dealership’s great increase in sales since I moved into my new, much larger dealership. Then he said to me, “Earl, I’ve been telling to build that new dealership for the last ten years!” We both laughed.
I am proud and lucky to have known Jim Moran. I learned a huge amount from him and I would have to say that he had a greater influence on my business life than anyone except my father.
AUTO BUYING PROGRAMS AT WHOLESALE CLUBS
Everyone is familiar with wholesale warehouse-style buying clubs. The stores always resemble warehouses and skimp on the typical amenities you find in a conventional retail department store. The products are often sold in bulk which sometime requires you to buy a lot more than you might need. Usually you have to help yourself and there are no sale people to assist you. The brands and products they buy change often because they buy large quantities of a particular brand when they can buy it a low price. You pay an annual fee to be a member. Some of the more popular and wider spread wholesale clubs are Costco, Sam’s Club, and BJ’s Wholesale Club.
In general, this concept works and prices are generally lower at these kinds of stores. It is easy to see how wholesale clubs can afford to sell products cheaper than conventional department stores. But most wholesale clubs have begun to branch out into other areas that are outside their original concept. One of these relative new areas is an “auto-buying service”. Unfortunately for the consumers, wholesale clubs are unable to buy cars from the manufacturers in bulk and pass along the savings to their customers like they do rice and TV sets. What the wholesale clubs do is sign agreements with car dealers like me who are supposed to sell you cars at a very low price. The car dealers pay the wholesale clubs a monthly fee for the privilege of being the exclusive dealer of that make authorized to sell cars to their members. The fee the dealer pays the wholesale warehouse increases their cost of sales to wholesale club members, but the theory is that the referral of members will increase their volume to more than offset this fee.
I am signed up with one local wholesale club and am in discussions with another. What disappoints me about these programs is that many wholesale club members buy cars from the dealer associates based on their trust in the wholesale club. The problem with this is that many dealers often do not abide by the prices they are supposed to quote. Dealers are supposed to have one person designated as the wholesale club member contact. But what often happens is that the first salesman who sees the wholesale member enter the showroom handles the sale. Salesmen are paid on commission and will mark up the price as far as they can get away with. Because wholesale clubs have hundreds of dealers and thousands of club members, it is impossible to police what is happening on the showroom floors during the sale to club members.
What all this means is that, just because you are a member of a wholesale club with an auto-buying program, don’t relax your vigilance when buying a car…even if it’s from the dealer endorsed by your wholesale club. There is a lot of due diligence that you must do before you pay a dealer for a new or used car. The most important is shopping and comparing prices on the same year, make, and model car you have decided on. You should get at least 3 “bids” and the Internet is the easiest place to do this. You should shop your financing separately and choose the dealer’s financing only if it is lower or competitive. You should shop the value of your trade-in separately, getting at least three bids on its value. When you have done all of this homework and preparation, only then venture into the dealership recommended by your wholesale club. Hopefully, the price from this recommended dealer will be lower, but I’m betting in most cases it won’t be. The wholesale clubs will show you statistics about the savings the club members have realized by using their recommended dealers, but these savings are from lots of people who did not do their homework, especially with competitive comparison of prices.
When you enter a dealership recommended by your warehouse club, insist on speaking to their designated representative. If he is off that day, come back when he is there. If you get an uneasy feeling about the price you are quoted or anything else regarding your visit then contact your wholesale club immediately and report it. Some wholesale clubs are taking steps against dealer fees, but some are not. The price that you and the wholesale club think you are paying often does not include the dealer fee which can range up to $900 or more. If your club does not insist that its dealers include their dealer fee (simply additional profit for the dealer) in their club pricing, they should.
In general, this concept works and prices are generally lower at these kinds of stores. It is easy to see how wholesale clubs can afford to sell products cheaper than conventional department stores. But most wholesale clubs have begun to branch out into other areas that are outside their original concept. One of these relative new areas is an “auto-buying service”. Unfortunately for the consumers, wholesale clubs are unable to buy cars from the manufacturers in bulk and pass along the savings to their customers like they do rice and TV sets. What the wholesale clubs do is sign agreements with car dealers like me who are supposed to sell you cars at a very low price. The car dealers pay the wholesale clubs a monthly fee for the privilege of being the exclusive dealer of that make authorized to sell cars to their members. The fee the dealer pays the wholesale warehouse increases their cost of sales to wholesale club members, but the theory is that the referral of members will increase their volume to more than offset this fee.
I am signed up with one local wholesale club and am in discussions with another. What disappoints me about these programs is that many wholesale club members buy cars from the dealer associates based on their trust in the wholesale club. The problem with this is that many dealers often do not abide by the prices they are supposed to quote. Dealers are supposed to have one person designated as the wholesale club member contact. But what often happens is that the first salesman who sees the wholesale member enter the showroom handles the sale. Salesmen are paid on commission and will mark up the price as far as they can get away with. Because wholesale clubs have hundreds of dealers and thousands of club members, it is impossible to police what is happening on the showroom floors during the sale to club members.
What all this means is that, just because you are a member of a wholesale club with an auto-buying program, don’t relax your vigilance when buying a car…even if it’s from the dealer endorsed by your wholesale club. There is a lot of due diligence that you must do before you pay a dealer for a new or used car. The most important is shopping and comparing prices on the same year, make, and model car you have decided on. You should get at least 3 “bids” and the Internet is the easiest place to do this. You should shop your financing separately and choose the dealer’s financing only if it is lower or competitive. You should shop the value of your trade-in separately, getting at least three bids on its value. When you have done all of this homework and preparation, only then venture into the dealership recommended by your wholesale club. Hopefully, the price from this recommended dealer will be lower, but I’m betting in most cases it won’t be. The wholesale clubs will show you statistics about the savings the club members have realized by using their recommended dealers, but these savings are from lots of people who did not do their homework, especially with competitive comparison of prices.
When you enter a dealership recommended by your warehouse club, insist on speaking to their designated representative. If he is off that day, come back when he is there. If you get an uneasy feeling about the price you are quoted or anything else regarding your visit then contact your wholesale club immediately and report it. Some wholesale clubs are taking steps against dealer fees, but some are not. The price that you and the wholesale club think you are paying often does not include the dealer fee which can range up to $900 or more. If your club does not insist that its dealers include their dealer fee (simply additional profit for the dealer) in their club pricing, they should.
Saturday, April 14, 2007
HOW TO COMMUNICATE BEST WITH YOUR CAR DEALER
As many of you know, I communicate directly with my customers. Some would say to a fault. I don’t have a secretary or administrative assistant. My dealership’s telephone receptionist never asks the caller “who’s calling” or “may I ask the nature of your call?” and she puts my calls (and the calls to all my employees) right through. If I am not in my office, she puts them through automatically to my cell phone…7 days a week. I also have four red phones in four locations of my dealership…the showroom floor by the receptionist, the service customer waiting lounge, outdoors in the service drive, and in the body shop waiting lounge. Each phone has a picture of me with the message, “Customer Hotline To Earl Stewart. The Buck Stops Here. Have We Not Exceeded Your Expectations? Please Let Me Know. Simply Pick Up The Receiver And Wait For Me To Answer.” As if all this wasn’t enough, I put my home telephone number and cell phone number on my business cards and pass them out to my new customers at our bimonthly New Owners Dinner.
I say all this, not to brag (or maybe just a little). It might surprise you that I am not deluged with phone calls. I get quite a few, but considering I sell 400-500 cars a month and service thousands of cars each month, I doubt if I average more that 25 calls per day. Most of them are positive, complimentary calls. I believe one reason for this is that my employees are motivated to work harder to satisfy my customers because they know, if they don’t, I’m going to hear about it very quickly. Another reason is that my customers are remarkably respectful of the fact that they can call me and do not take advantage of it. Frankly, my wife, Nancy, was very nervous about this when I first started passing out my business card with my home telephone number. Would you believe that I don’t get more than 5 or 6 home calls a week? When you extend your trust to people, they almost always respect that and do not take advantage.
Of course, you are not going to find a lot of car dealers who do what I do. But here is how you can improve your communications in other ways that will allow you to get problems solved and promises kept. Always ask for the business card of every person you deal with. If they don’t have a card, be sure to get their name. This improves your service right away because the person is no longer anonymous. Ask the person for his cell phone number. There was a time when it was considered wrong to call someone on his cell phone, but that was before cell phone rates became so cheap and the cell phone became universal. If this is a critical person you are dealing with, ask for his home telephone number too. Here is a little trick that I use when I do this. I always start out by giving them my cell phone and my home phone number. Then I say “and may I have yours?” I can’t remember ever having been refused. If someone you are doing business with refuses to give you his cell or home phone number, maybe you should wonder why.
Also, make it a point to be introduced to this person’s manager. Get the manager’s business card and as many contact numbers as he is willing to share with you. When you do this, you have put the salesman or service advisor on notice that if he doesn’t return your phone calls you will be calling his boss. If you really want to have an edge, ask to meet the general manager and/or owner of the dealership. Get his telephone numbers. Now you will have everybody’s attention when you come into the dealership to transact business.
If you are a “computer person”, collect email addresses from everybody you deal with. Email is not as timely as a telephone, but it has the advantage over the telephone because it is “on the record”. When you make a request of a person by email, he can’t deny it because you have a copy of the message. I know that with Microsoft Outlook email, I get an acknowledgement every time somebody opens an email that I sent them. Furthermore you can copy as many people as you like with an email. You can send copies that the primary recipient knows about or make them blind copies that he can’t tell were sent. Someone is a lot more likely to act on your request when he knows that it is a matter of record and his boss was copied with the email.
If you can force yourself into the habit of getting names, telephone numbers, and email addresses from everybody you deal with and their managers, conducting business with your car dealer (or any other business) will be much smoother and trouble free.
I say all this, not to brag (or maybe just a little). It might surprise you that I am not deluged with phone calls. I get quite a few, but considering I sell 400-500 cars a month and service thousands of cars each month, I doubt if I average more that 25 calls per day. Most of them are positive, complimentary calls. I believe one reason for this is that my employees are motivated to work harder to satisfy my customers because they know, if they don’t, I’m going to hear about it very quickly. Another reason is that my customers are remarkably respectful of the fact that they can call me and do not take advantage of it. Frankly, my wife, Nancy, was very nervous about this when I first started passing out my business card with my home telephone number. Would you believe that I don’t get more than 5 or 6 home calls a week? When you extend your trust to people, they almost always respect that and do not take advantage.
Of course, you are not going to find a lot of car dealers who do what I do. But here is how you can improve your communications in other ways that will allow you to get problems solved and promises kept. Always ask for the business card of every person you deal with. If they don’t have a card, be sure to get their name. This improves your service right away because the person is no longer anonymous. Ask the person for his cell phone number. There was a time when it was considered wrong to call someone on his cell phone, but that was before cell phone rates became so cheap and the cell phone became universal. If this is a critical person you are dealing with, ask for his home telephone number too. Here is a little trick that I use when I do this. I always start out by giving them my cell phone and my home phone number. Then I say “and may I have yours?” I can’t remember ever having been refused. If someone you are doing business with refuses to give you his cell or home phone number, maybe you should wonder why.
Also, make it a point to be introduced to this person’s manager. Get the manager’s business card and as many contact numbers as he is willing to share with you. When you do this, you have put the salesman or service advisor on notice that if he doesn’t return your phone calls you will be calling his boss. If you really want to have an edge, ask to meet the general manager and/or owner of the dealership. Get his telephone numbers. Now you will have everybody’s attention when you come into the dealership to transact business.
If you are a “computer person”, collect email addresses from everybody you deal with. Email is not as timely as a telephone, but it has the advantage over the telephone because it is “on the record”. When you make a request of a person by email, he can’t deny it because you have a copy of the message. I know that with Microsoft Outlook email, I get an acknowledgement every time somebody opens an email that I sent them. Furthermore you can copy as many people as you like with an email. You can send copies that the primary recipient knows about or make them blind copies that he can’t tell were sent. Someone is a lot more likely to act on your request when he knows that it is a matter of record and his boss was copied with the email.
If you can force yourself into the habit of getting names, telephone numbers, and email addresses from everybody you deal with and their managers, conducting business with your car dealer (or any other business) will be much smoother and trouble free.
Friday, April 06, 2007
CLASS ACTION SUES S.C. DEALERS ABOUT DEALER FEE
The Tallahassee law firm of Myers & Fuller is representing several car dealers that have been named as defendants in a class action suit along with almost every other new car dealer in the state of South Carolina related to the charging of dealer fees aka documentary fees, dealer prep, etc.
The plaintiff’s lawyers representing the class of consumers who are bringing the lawsuit claim that “the placement of such fees on a dealer’s buyer’s order or invoice is deceptive in that it implies that the fee is separate and distinct from the general overhead that car buyers expected to be included in the sale price for a car and that such placement suggest that the fee is mandatory”.
Readers of this column have seen several articles I have written about or mentioned dealer fees. Virtually every car dealer in Florida charges a dealer fee although it may carry some other label, like documentary fee or dealer prep fee. Several states have made this illegal and it looks like South Carolina may be next.
A particularly onerous part of the dealer fee is that dealers are legally required to “charge every customer this fee if he charges just one customer”. I supposed the lawmakers were well intentioned when they made this ruling, but like so many other well intended lawmakers, they inadvertently “bit the car buyer right in the butt”. I think their reasoning when they passed this law was to prevent car dealers from discriminating against the less informed and sophisticated buyers. In hindsight we can see how stupid this law is because it allows the car dealer to charge everybody the dealer fee, including the informed, sophisticated buyer.
Because virtually all car dealers in Florida charge this fee (My dealership is the only one I know that doesn’t), the car dealer overcomes objections to the dealer fee by saying “this is a fee that all Florida car dealers charge”. What is a car buyer to say? He has been told that everybody charges it and that it is illegal for the dealer to take it off his buyer’s order or invoice.
Florida did pass one law to protect the consumer against the dealer fee. This law says that the dealer must include the dealer fee in advertised prices (The price a salesman quotes you is not considered an “advertised price”). Many dealers don’t know about the law or simply ignore it. You can pick up the PB Post any weekend and find several car ads with prices that do not include the dealer fee. In the fine print at the bottom of the ad, it will say “plus dealer fees” or in some cases tell you the amount of the dealer fee. Florida law also provides a loophole in this law, which was the subject of my last column. The loophole is that dealer group ads don’t have to abide by the law!
Dealers who do understand the law and wish to abide by it have figured out a way to get around it. They simply pick one car of a particular model and advertise that price including the dealer fee. You don’t know that there is only one car available with the dealer fee included in the price. The only disclosure is a number along side the car like #2668A which is supposed to let you know that this is the only car available with the dealer fee included in the price. That innocuous number is the stock number of that particular car. There is usually another “gotcha” which is “price good on date of publication only” in the fine print. The ad often says something like “25 others available and similar savings”. The reason it says “similar” and not the “same” is because they add the dealer fee to the prices of the others. The chances are that the car they advertised is not the right color and equipment for you and, even if it were, the chances that they will have it there when you arrive are slim and none. If the odds aren’t already stacked totally against you, the sales people are often not paid any commission or a very small commission on all advertised cars. How easy do you think it will be to buy that advertised car from a salesman who can make a lot more money by selling you one without the dealer fee included?
The class action suit in South Carolina is symptomatic of the rising consumer awareness around the country. Today’s consumers are more educated and sophisticated than ever before. They are also less tolerant of being taken advantage of. Call me a “cockeyed optimist”, but I think it won’t be long before we see a law in Florida to protect car buyers from the dealer fee.
The plaintiff’s lawyers representing the class of consumers who are bringing the lawsuit claim that “the placement of such fees on a dealer’s buyer’s order or invoice is deceptive in that it implies that the fee is separate and distinct from the general overhead that car buyers expected to be included in the sale price for a car and that such placement suggest that the fee is mandatory”.
Readers of this column have seen several articles I have written about or mentioned dealer fees. Virtually every car dealer in Florida charges a dealer fee although it may carry some other label, like documentary fee or dealer prep fee. Several states have made this illegal and it looks like South Carolina may be next.
A particularly onerous part of the dealer fee is that dealers are legally required to “charge every customer this fee if he charges just one customer”. I supposed the lawmakers were well intentioned when they made this ruling, but like so many other well intended lawmakers, they inadvertently “bit the car buyer right in the butt”. I think their reasoning when they passed this law was to prevent car dealers from discriminating against the less informed and sophisticated buyers. In hindsight we can see how stupid this law is because it allows the car dealer to charge everybody the dealer fee, including the informed, sophisticated buyer.
Because virtually all car dealers in Florida charge this fee (My dealership is the only one I know that doesn’t), the car dealer overcomes objections to the dealer fee by saying “this is a fee that all Florida car dealers charge”. What is a car buyer to say? He has been told that everybody charges it and that it is illegal for the dealer to take it off his buyer’s order or invoice.
Florida did pass one law to protect the consumer against the dealer fee. This law says that the dealer must include the dealer fee in advertised prices (The price a salesman quotes you is not considered an “advertised price”). Many dealers don’t know about the law or simply ignore it. You can pick up the PB Post any weekend and find several car ads with prices that do not include the dealer fee. In the fine print at the bottom of the ad, it will say “plus dealer fees” or in some cases tell you the amount of the dealer fee. Florida law also provides a loophole in this law, which was the subject of my last column. The loophole is that dealer group ads don’t have to abide by the law!
Dealers who do understand the law and wish to abide by it have figured out a way to get around it. They simply pick one car of a particular model and advertise that price including the dealer fee. You don’t know that there is only one car available with the dealer fee included in the price. The only disclosure is a number along side the car like #2668A which is supposed to let you know that this is the only car available with the dealer fee included in the price. That innocuous number is the stock number of that particular car. There is usually another “gotcha” which is “price good on date of publication only” in the fine print. The ad often says something like “25 others available and similar savings”. The reason it says “similar” and not the “same” is because they add the dealer fee to the prices of the others. The chances are that the car they advertised is not the right color and equipment for you and, even if it were, the chances that they will have it there when you arrive are slim and none. If the odds aren’t already stacked totally against you, the sales people are often not paid any commission or a very small commission on all advertised cars. How easy do you think it will be to buy that advertised car from a salesman who can make a lot more money by selling you one without the dealer fee included?
The class action suit in South Carolina is symptomatic of the rising consumer awareness around the country. Today’s consumers are more educated and sophisticated than ever before. They are also less tolerant of being taken advantage of. Call me a “cockeyed optimist”, but I think it won’t be long before we see a law in Florida to protect car buyers from the dealer fee.
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