I’m rerunning below the column I wrote last year about Nitrogen because it came to my attention that the Palm Beach County bus system, Palm Tran, was planning on investing over $80,000 for equipment to fill their bus’ tires with Nitrogen.
I wrote County Commissioner, Karen Marcus, an email explaining why this was a mistake and I sent her a copy of the column which you can read below, if you missed it last year. Below is a copy of my email:
Good morning, Mrs. Marcus,
Gary Todd, a friend of mine, told me this morning that Palm Tran had spent $65,000 on Nitrogen tire inflation systems purportedly to improve fuel economy and tire life in Palm Beach County buses.
I Googled the news article in last Friday’s PB Post and it gave as a reason for this decision to spend taxpayers’ money that “NASCAR and commercial and military aircraft” use Nitrogen in their tires.
NASCAR and commercial and military airplanes use Nitrogen in their tires for entirely different reasons than reducing tire wear and increasing fuel economy. Race cars and landing airplanes are subjected to extremely high temperatures never experienced in car or bus tires. Airplanes also experience extremes in atmospheric pressure which car and bus tires don’t.
I’ve attached a column that I wrote for the Hometown News last year, “Don’t Pay for Nitrogen in Your Tires”. I wrote this article to benefit those who might persuaded to pay for Nitrogen instead of free air [which is already 78% Nitrogen] to put in their tires. I even considered doing this for my customers at my Toyota dealerships and for my rental car fleet until I did some research on the pros and cons. I even bought canisters of Nitrogen and ran pure Nitrogen alternatively with air in my rental fleet for a period of time. The bottom line is that there is no measurable difference in fuel economy or tire wear with air v. s. Nitrogen.
Please read my article and feel free to call me to discuss this at any time. My cell number is 561 358-1474. I wouldn’t expect you to take my word for cancelling this expenditure, but if you instruct Palm Tran to conduct an actual test of fuel economy and tire wear with and without Nitrogen, I think they will come to the same conclusion as I.
Best wishes,
Earl
There was an article in the October 25th Wall Street Journal which concluded that Nitrogen was of no useful, measurable benefits to fuel economy, safety, or tire life. It concluded that if the Nitrogen was free, no harm can result from using it.
CNN recently ran a story exposing the Nitrogen scam you can see the video clip on this story by clicking on http://www.cnn.com/video/#/video/tech/2007/10/26/hunter.check.your.tires.cnn?iref=videosearch. The article discussed a study that Consumer Reports did on the effectiveness of Nitrogen in tires and interviewed the CR tester. Consumer Report filled a large number of tires of all makes and models, half with air and half with pure Nitrogen. After one year, there was only a 1.3 pound pressure difference in the tires filled with air and Nitrogen. The obvious conclusion was that Nitrogen for your tires is a waste of money.
Costco is often cited as a reason to buy Nitrogen for your tires. When you buy a set of tires from Costco, they fill the tires with Nitrogen free. When you bring your car back to Costco’s auto service center, they will top off your tires with Nitrogen for you free. I can understand Costco’s motive in this because I also operate an automotive service center and I also sell tires. All auto service center operators want to give their customers a good reason for bringing their cars back to them regularly for service. Why? Because we want to sell you more services. Need I say more?
Here's the original posting:
Don’t Pay for Nitrogen in Your Tires
It’s bad enough that gas stations now make you pay to inflate your own tires with air. But at least you are getting what you paid for…air which does what it’s supposed to do and that is to keep your tires inflated.
Many car dealers are now charging customers to fill their tires with “pure” nitrogen. They tell you that nitrogen does not leak from your tires as quickly as air and this means that your tires will stay properly inflated longer before you have to add more nitrogen (and pay the dealer for this). What the dealers don’t tell you is that the air that is already in your tires is mostly nitrogen anyway. In fact, 78% of the air you breathe is nitrogen. Oxygen represents only 12% of the air. The rest of air includes carbon dioxide and other inert gases. I’m not sure what the purity of the nitrogen is that they pump into your tires for $199 (this is not a typo…one hundred and ninety-nine dollars for filling four tires full of mainly air). But, you can be assured that the purity of the nitrogen is not 100% and is probably closer to the 78% that regular air consists of.
Even knowing all of the above, I have to admit that I was curious about whether or not nitrogen could prolong tire live and improve fuel economy because I knew that NASCAR drivers used nitrogen filled tires and I heard that Volvo’s came from the factory with nitrogen in their tires. I have a BS in Physics from the University of Florida and a Master of Science from Purdue and these kinds of things interest me. So, to find out for myself, my dealership conducted an experiment. We have a fleet of rental cars and we filled two tires of each car with pure nitrogen and 2 tires with regular air. Over the course of many weeks, we measured the pounds of inflation in the nitrogen and air filled tires. There was no difference in the inflations of the nitrogen v. s. the air filled tires. If there is no difference in the inflation, there can be no benefit from nitrogen of better gas mileage or fuel economy.
You may have read my column last week, “Beware the Phony Monroney”. In that column I warned you about car dealers that add a window sticker designed to look exactly like the federally mandated Monroney sticker. This is where you should look for dealer installed accessories and additional dealer markups over MSRP. Often these accessories have a high price but a very low cost. In the case of nitrogen in four tires selling for $199, this is exactly the case. Since air is already 78% nitrogen, it costs virtually nothing to extract nitrogen from the air. To be generous, let’s say the dealer’s cost is $10 including labor. That is a 2000% markup when he charges $199.
Just when I thought I’d seen it all, I actually saw window stickers on a car today from another dealer who had actually modified the Monroney label to show nitrogen filled tires. To do this, the dealer actually had to remove the real Monroney label, make the modification showing the nitrogen tires, and re-paste the Monroney label to the window. Federal law requires that a Monroney label not be removed until the vehicle is delivered to the customer. It also requires that it not be modified. This new vehicle was one we had traded for from another dealer and still had the counterfeit Monroney and the modified real Monroney attached to the window. The modified Monroney looked so authentic, that one of my technicians and my service manager inquired of Toyota about the necessity of our carrying nitrogen tanks so that we could refill these tires with Nitrogen. If this could fool a Toyota dealer’s technicians and service manager, it might fool you too.
This particular dealer also had another charge added to the counterfeit Monroney sticker, a $4,995.00 “Market Value Adjustment”. Most prospective customers think that this is part of the manufacturer’s recommended retail price. They either end up paying too much money for the vehicle or think they are getting more for their trade-in or a bigger discount than they really are. It’s easy to allow someone an extra $5,000 on their trade-in when you have already marked the car up an extra $5,000 over sticker price.
Friday, October 26, 2007
Wednesday, October 24, 2007
Friday, October 19, 2007
Always get an “Out the Door” Price (originally posted 4/23/06)
Many states have laws prohibiting car dealers from adding “fees” onto the prices they quote you. Unfortunately, Florida is not one of these states. The state law in Florida requires only that the dealers disclose on the buyers’ order that this additional charge is not a local, state, or federal fee, but is actually just profit to the dealer.
Almost every car dealership in Florida has this extra profit printed on their buyer’s order, under an assortment of labels like “Dealer Fee”, “Doc Fee”, and Dealer Prep”. You will not see it on the car’s price sticker you will probably not hear any verbal disclosure by the sales person or manager, unless you ask. If you ask, you will be told that “all other dealers charge this” and this is “almost” true.
Florida law also requires that when a dealer has this additional profit printed on his buyer’s order, he must not delete it for some customers and charge it to others. The only way he can effectively eliminate this extra profit is by reducing the quoted selling price of the car by this amount, but keep the dealer fee amount that is printed on the buyer’s order. This is rarely done because dealers do not pay their salesmen or managers a commission on the dealer fee. If you demand the price be reduced to compensate for the dealer fee, it cuts the salesman’s commission. Dealer fees range from $500 to $900 and a typical salesman’s commission is 25%, costing the salesman $125 to $225.
Florida law requires that a dealer include the dealer fee in the price of an advertised car. This is often ignored by dealers advertising on the Internet and in direct mail because it is below the “radar screen” of the Attorney General’s office. In newspaper, TV, and radio ads one car is advertised at a low price with a seemingly innocuous designation like “#1234B” (the stock # of the car) all there is to tell the buyer that only one car is available at this price. Another common tactic is a fine print disclosure at the bottom of the ad reading “price good on date of publication only”. The odds of being able to buy one of these cars at the advertised price are not good. Not only is there only one car with the price good for just one day, but the salesman receives no commission or a much smaller commission if he sells you this car.
My advice is not to pay much attention to advertised car prices. Do your shopping on the Internet or by telephone. Insist on an “out the door” price including everything except sales tax and license tag. If buying a new car, get several “out the door” prices quoted on the exact same year, make, model, and accessorized car. Two very good free Web sites to get information on dealer costs and fair retail prices are http://www.kbb.com/ and http://www.edmunds.com/. Consumer Reports is also an excellent source of product information and pricing information, but there is a fee for their Web site.
Almost every car dealership in Florida has this extra profit printed on their buyer’s order, under an assortment of labels like “Dealer Fee”, “Doc Fee”, and Dealer Prep”. You will not see it on the car’s price sticker you will probably not hear any verbal disclosure by the sales person or manager, unless you ask. If you ask, you will be told that “all other dealers charge this” and this is “almost” true.
Florida law also requires that when a dealer has this additional profit printed on his buyer’s order, he must not delete it for some customers and charge it to others. The only way he can effectively eliminate this extra profit is by reducing the quoted selling price of the car by this amount, but keep the dealer fee amount that is printed on the buyer’s order. This is rarely done because dealers do not pay their salesmen or managers a commission on the dealer fee. If you demand the price be reduced to compensate for the dealer fee, it cuts the salesman’s commission. Dealer fees range from $500 to $900 and a typical salesman’s commission is 25%, costing the salesman $125 to $225.
Florida law requires that a dealer include the dealer fee in the price of an advertised car. This is often ignored by dealers advertising on the Internet and in direct mail because it is below the “radar screen” of the Attorney General’s office. In newspaper, TV, and radio ads one car is advertised at a low price with a seemingly innocuous designation like “#1234B” (the stock # of the car) all there is to tell the buyer that only one car is available at this price. Another common tactic is a fine print disclosure at the bottom of the ad reading “price good on date of publication only”. The odds of being able to buy one of these cars at the advertised price are not good. Not only is there only one car with the price good for just one day, but the salesman receives no commission or a much smaller commission if he sells you this car.
My advice is not to pay much attention to advertised car prices. Do your shopping on the Internet or by telephone. Insist on an “out the door” price including everything except sales tax and license tag. If buying a new car, get several “out the door” prices quoted on the exact same year, make, model, and accessorized car. Two very good free Web sites to get information on dealer costs and fair retail prices are http://www.kbb.com/ and http://www.edmunds.com/. Consumer Reports is also an excellent source of product information and pricing information, but there is a fee for their Web site.
Friday, October 12, 2007
Earl Stewart Is Responsible for Car Dealers’ Bad Reputation?
The private feedback I get from other car dealers who read this column, listen to my radio talk show at 9 AM every Saturday on www.SeaviewAM960.com, or see my advertising [view all my TV commercials at www.YouTube.com/EarlStewartToyota] is that I am causing damage to their reputations. Let me hastily add that they won’t state this publicly. No car dealer has ever written a letter to the editor of Hometown News. They will post negative statements on my Blog, www.EarlStewartOnCars.com, but always anonymously. I’ve had only one call to my radio show from a car dealer and he wanted to remain anonymous.
First let me say that I have been doing my Hometown News column for less than two years and my Blog for about the same time. My advertisements against the dealer fee and such have only been running for 3 to 4 years. My radio show is less than a year old. Given this, how did car dealers earn such a bad reputation before I started talking about it?
I’ve been a car dealer since 1968 and I can never remember car dealers not having a bad reputation. Comedians joke about car dealers as much as they joke about lawyers and politicians. In fact, car dealers have even had movies made about their slimy way of doing business. Two of them are Cadillac Man, starring Robin Williams and Used Cars starring Kurt Russell. I’ve always been acutely aware of the generally bad image that car dealers have. That may be because I wasn’t always in the car business, although my father was a car dealer. I studied Physics in college, earning my BS from the University of Florida and my MS from Purdue. My first real job was as an Electronics Engineer for Westinghouse Electric Corporation. I had those early years working outside the car business to give me a better real life perspective when I came to work for my father in 1968.
Surely other car dealers are aware of their generally bad reputation. How do you suppose they think it came about? Can they believe that our reputation is a mistake and that most car dealers really treat their customers with integrity, courtesy, and respect? Do they believe that customers are simply not telling the truth about their bad experiences with car dealers? Anybody who has ever been to a party or other social event has to have overheard at least one horror story about someone buying a car or having their car serviced.
I’m going to assume that car dealers really did know that they had a bad reputation even before Earl Stewart came along. I think they are simply angry at me because I’m calling more attention to a problem that everybody already knows about. And they’re mad because I’m offering advice to customers about how to avoid the pitfalls in buying a car and having a car serviced. But the biggest reason they are furious with me is that they see my business growing relative to theirs. They see their customers coming to my dealership to buy their next car because they know they will be treated with respect, courtesy, and integrity.
I had one anonymous email from a dealer say that “the only reason I have four red phones around my dealership that customers can call me directly on is because I don’t trust my employees”. My answer to him was “the only possible way I would dare to have four red phones that customers can call me directly on seven days a week is because I do trust my employees”. Think about this. My dealership sells 400 to 500 cars every month and services thousands more, making it one of the largest car dealerships in the World. If my employees did not take very good care of all those customers, how could I possibly personally answer all those complaints? The fact is that the reason other dealers don’t allow customers to have direct contact with them is because they are afraid. In every organization there is a mentality of “never let the boss hear a complaint”. Of course, that could be a good thing if she never heard a complaint because all of her customers were happy. But 40 years of experience has taught me that the normal way that the boss never hears the complaints is by not allowing the customers access to the boss.
That’s your problem, Mr. Car Dealer. You think (or maybe you just want to think) your employees are doing a good job satisfying your customers because you don’t hear any complaints. Or maybe you think you are doing a good job in this category because the factory customer satisfaction surveys look good. Have you read the expose in Automotive News about how car dealers routinely rig customer satisfaction surveys? Salesmen offer customers a free tank of gas if they will bring them their “blank” survey so the salesman can fill it out themselves. Or, the salesman gives the manufacturer a phony email address so that the survey comes to a PC at the dealership instead of to the customers. There are lots of tricks like this to make a dealer’s customer satisfaction score look a lot better than it really is.
The only accurate way to measure customer satisfaction is by measuring how many customers who buy a car from you buy their next car from you…customer loyalty. In your service department how many customers bring the car they bought from you back to you for service…customer retention. Toyota has told their dealers that they will begin to measure customer satisfaction in this manner in 2008. My customer loyalty and customer retention is very, very high. If you are one of those car dealers who thinks everything is hunky dory, maybe you better take a look at these two numbers.
First let me say that I have been doing my Hometown News column for less than two years and my Blog for about the same time. My advertisements against the dealer fee and such have only been running for 3 to 4 years. My radio show is less than a year old. Given this, how did car dealers earn such a bad reputation before I started talking about it?
I’ve been a car dealer since 1968 and I can never remember car dealers not having a bad reputation. Comedians joke about car dealers as much as they joke about lawyers and politicians. In fact, car dealers have even had movies made about their slimy way of doing business. Two of them are Cadillac Man, starring Robin Williams and Used Cars starring Kurt Russell. I’ve always been acutely aware of the generally bad image that car dealers have. That may be because I wasn’t always in the car business, although my father was a car dealer. I studied Physics in college, earning my BS from the University of Florida and my MS from Purdue. My first real job was as an Electronics Engineer for Westinghouse Electric Corporation. I had those early years working outside the car business to give me a better real life perspective when I came to work for my father in 1968.
Surely other car dealers are aware of their generally bad reputation. How do you suppose they think it came about? Can they believe that our reputation is a mistake and that most car dealers really treat their customers with integrity, courtesy, and respect? Do they believe that customers are simply not telling the truth about their bad experiences with car dealers? Anybody who has ever been to a party or other social event has to have overheard at least one horror story about someone buying a car or having their car serviced.
I’m going to assume that car dealers really did know that they had a bad reputation even before Earl Stewart came along. I think they are simply angry at me because I’m calling more attention to a problem that everybody already knows about. And they’re mad because I’m offering advice to customers about how to avoid the pitfalls in buying a car and having a car serviced. But the biggest reason they are furious with me is that they see my business growing relative to theirs. They see their customers coming to my dealership to buy their next car because they know they will be treated with respect, courtesy, and integrity.
I had one anonymous email from a dealer say that “the only reason I have four red phones around my dealership that customers can call me directly on is because I don’t trust my employees”. My answer to him was “the only possible way I would dare to have four red phones that customers can call me directly on seven days a week is because I do trust my employees”. Think about this. My dealership sells 400 to 500 cars every month and services thousands more, making it one of the largest car dealerships in the World. If my employees did not take very good care of all those customers, how could I possibly personally answer all those complaints? The fact is that the reason other dealers don’t allow customers to have direct contact with them is because they are afraid. In every organization there is a mentality of “never let the boss hear a complaint”. Of course, that could be a good thing if she never heard a complaint because all of her customers were happy. But 40 years of experience has taught me that the normal way that the boss never hears the complaints is by not allowing the customers access to the boss.
That’s your problem, Mr. Car Dealer. You think (or maybe you just want to think) your employees are doing a good job satisfying your customers because you don’t hear any complaints. Or maybe you think you are doing a good job in this category because the factory customer satisfaction surveys look good. Have you read the expose in Automotive News about how car dealers routinely rig customer satisfaction surveys? Salesmen offer customers a free tank of gas if they will bring them their “blank” survey so the salesman can fill it out themselves. Or, the salesman gives the manufacturer a phony email address so that the survey comes to a PC at the dealership instead of to the customers. There are lots of tricks like this to make a dealer’s customer satisfaction score look a lot better than it really is.
The only accurate way to measure customer satisfaction is by measuring how many customers who buy a car from you buy their next car from you…customer loyalty. In your service department how many customers bring the car they bought from you back to you for service…customer retention. Toyota has told their dealers that they will begin to measure customer satisfaction in this manner in 2008. My customer loyalty and customer retention is very, very high. If you are one of those car dealers who thinks everything is hunky dory, maybe you better take a look at these two numbers.
Friday, October 05, 2007
Earl Stewart on CNN Today - Friday 10/5
Check out Earl Stewart's interview with Susan Candiotti tonight during Wolf Blitzer's Situation Room. Between 7 - 8 PM EST.
Maybe Your Car Dealer is a Good Guy
I wrote the article below last year. It advises you what to do if you have a problem with a car dealership. I decided to run this article again after a conversation with Ted Smith, the president of the Florida Automobile Dealers Association.
Ted and I spoke the other day after he was called by a local reporter for the Palm Beach Post who is writing an article about me. This reporter told Ted that his research so far had found me to be a good and honest car dealer. Ted responded that, if he checked out any car dealer as carefully, this reporter would find that most car dealers are good and honest people too. I believe that.
The reason that car dealerships have a bad reputation, in general, is not because of direct dealings with the owners or general managers of the dealerships. It is though dealings with those employed by the owner/GM. This is why I give the advice you will read below about taking your complaint as high up the ladder of command as you can.
What to do if you are Treated Badly by a Car Dealer
Hopefully the sales or service experience with your car dealer went well. But, sometimes they don’t. Now what? The advice I give you applies to all business transactions, not just car dealerships.
Your first step should be to communicate your complaint ASAP to the General Manager or, preferably, the owner. Be sure that you are talking to the real owner or the real general manger. A General Manager is over all employees in the entire company. A general “sales” manager is not a General Manager. If you can’t reach the owner (Many car dealerships are either publicly owned or owned by absentee owners), ask to see the General Manager. Often times the owner or General Manager is not aware of everything that goes on with all of their customers and employees. They might have new employee that should not have been hired or received inadequate training. Or, they may simply have a “rotten apple” that should not be working there. The ease and speed with which you can meet and speak to a General Manager or an owner is a pretty good measure of the integrity of the company as whole. If the owner or General Manager cares enough about her customers to allow total access, it is probably a very good place to do business. In fact, it is a good idea to find this out before you do business.
If you cannot reach the owner or General Manager, contact the manufacturer who franchises the dealership. Car dealers have a contract with the manufacturer called a franchise agreement and this contractual agreement requires that they treat their customers with courtesy, efficiency and integrity. Most manufacturers have a customer hotline that allows you to call and register a complaint directly. The owner or General Manager of the dealership will be made aware of your complaint. As you might guess, the manufacturer has quite of bit of clout with their dealer. If a dealer does not live up to his side of the contract, his franchise could be canceled or not renewed.
The third step I recommend, if numbers one and two don’t work, is to contact a consumer agency like The Better Business Bureau or the County Office of Consumer Affairs. These agencies will send your complaint to the dealership and request a written reply. No car dealership or business wants an unanswered complaint in the file of a governmental or private consumer agency.
Your last resort is to contact an attorney. I list this last because hiring an attorney just about eliminates the possibility that you can quickly, amicably and inexpensively resolve your differences with the car dealer. Be very careful which attorney you choose. Try to choose one that is primarily interested in helping you and not in generating large fees for himself. Under the Florida Unfair and Deceptive Trade Practices Act, an attorney is entitled to his fees and costs from the defendant in a lawsuit if he wins. These fees can be much larger than the amount of your claim, motivating an unethical attorney to spend more time than is needed and dragging out a case to generate more fees than are necessary. This can be very dangerous for you because the car dealer’s attorney’s fees run roughly parallel to your lawyer’s and you can be held liable for those if you lose the case.
Hopefully you never have to resort to the final step of hiring a lawyer. In trying steps one, two, and three try to present your complaint as concisely and politely as possible. You have every right to be angry when you are taken advantage of, but try to let your anger subside before you speak to or write to someone about your problem. We all react negatively to someone who is profane, raises his voice, or is sarcastic. Your goal of communicating and resolving your complaint is best reached by communicating clearly, politely and concisely.
Ted and I spoke the other day after he was called by a local reporter for the Palm Beach Post who is writing an article about me. This reporter told Ted that his research so far had found me to be a good and honest car dealer. Ted responded that, if he checked out any car dealer as carefully, this reporter would find that most car dealers are good and honest people too. I believe that.
The reason that car dealerships have a bad reputation, in general, is not because of direct dealings with the owners or general managers of the dealerships. It is though dealings with those employed by the owner/GM. This is why I give the advice you will read below about taking your complaint as high up the ladder of command as you can.
What to do if you are Treated Badly by a Car Dealer
Hopefully the sales or service experience with your car dealer went well. But, sometimes they don’t. Now what? The advice I give you applies to all business transactions, not just car dealerships.
Your first step should be to communicate your complaint ASAP to the General Manager or, preferably, the owner. Be sure that you are talking to the real owner or the real general manger. A General Manager is over all employees in the entire company. A general “sales” manager is not a General Manager. If you can’t reach the owner (Many car dealerships are either publicly owned or owned by absentee owners), ask to see the General Manager. Often times the owner or General Manager is not aware of everything that goes on with all of their customers and employees. They might have new employee that should not have been hired or received inadequate training. Or, they may simply have a “rotten apple” that should not be working there. The ease and speed with which you can meet and speak to a General Manager or an owner is a pretty good measure of the integrity of the company as whole. If the owner or General Manager cares enough about her customers to allow total access, it is probably a very good place to do business. In fact, it is a good idea to find this out before you do business.
If you cannot reach the owner or General Manager, contact the manufacturer who franchises the dealership. Car dealers have a contract with the manufacturer called a franchise agreement and this contractual agreement requires that they treat their customers with courtesy, efficiency and integrity. Most manufacturers have a customer hotline that allows you to call and register a complaint directly. The owner or General Manager of the dealership will be made aware of your complaint. As you might guess, the manufacturer has quite of bit of clout with their dealer. If a dealer does not live up to his side of the contract, his franchise could be canceled or not renewed.
The third step I recommend, if numbers one and two don’t work, is to contact a consumer agency like The Better Business Bureau or the County Office of Consumer Affairs. These agencies will send your complaint to the dealership and request a written reply. No car dealership or business wants an unanswered complaint in the file of a governmental or private consumer agency.
Your last resort is to contact an attorney. I list this last because hiring an attorney just about eliminates the possibility that you can quickly, amicably and inexpensively resolve your differences with the car dealer. Be very careful which attorney you choose. Try to choose one that is primarily interested in helping you and not in generating large fees for himself. Under the Florida Unfair and Deceptive Trade Practices Act, an attorney is entitled to his fees and costs from the defendant in a lawsuit if he wins. These fees can be much larger than the amount of your claim, motivating an unethical attorney to spend more time than is needed and dragging out a case to generate more fees than are necessary. This can be very dangerous for you because the car dealer’s attorney’s fees run roughly parallel to your lawyer’s and you can be held liable for those if you lose the case.
Hopefully you never have to resort to the final step of hiring a lawyer. In trying steps one, two, and three try to present your complaint as concisely and politely as possible. You have every right to be angry when you are taken advantage of, but try to let your anger subside before you speak to or write to someone about your problem. We all react negatively to someone who is profane, raises his voice, or is sarcastic. Your goal of communicating and resolving your complaint is best reached by communicating clearly, politely and concisely.
Friday, September 28, 2007
Senate Investigates Florida Car Dealer Fees
I just learned last week that Florida State Senator, Ken Pruitt, has called for an investigation of the propriety of fees charge by dealers to car buyers that are not federal, state, or local fees. If you are interested in viewing the information posted on the official state Web site on this subject, click on http://www.flsenate.gov/Publications/2008/Senate/reports/Workprogram/pdf/workprogram.pdf and then click on “Commerce” on the left side of the page. I salute Ken Pruitt for this effort. Senator Pruitt, as you probably know, is the President of the Florida Senate, a very powerful position. You should feel very pleased that our State government has taken the first step toward making the dealer fee illegal in Florida as it is in several other states.
If you are a reader of my weekly column in the Hometown News, a reader of my Blog, http://www.earlstewartoncars.com/, or a listener to my weekly radio show [9 AM every Saturday on Seaview AM 960], you already know all about dealer fees. If not, dealer fees are profit for the car dealer disguised as an official fee. The disguise consists of naming this profit documentary fee, doc fee, dealer prep fee, pre-delivery fee, dealer fee, etc. Some dealers use a combination. These fees vary from as little as $500 to nearly $1,000. In fact, there is no legal limit on the amount of these fees. Theoretically a dealer could charge you $10,000 or more!
I discuss this in a recent television ad you can view at http://www.youtube.com/watch?v=JeIuFEMgWJs
Florida law currently has some regulation on dealer fees. The amount of the fee must be printed on the buyer’s order, next to the real fees, like sales tax and licenses. Next to the dealer fee must be printed “These charges represent costs and profit to dealer”. This statement is misleading because it says costs and profits. Obviously, when the dealer charges you money to cover some of his expenses, you are increasing his profits. The statement should be, “These charges represent profit for the dealer” period. You know how many pieces of paper are involved in buying a car…lots and lots. A car buyer cannot possibly read every document he signs [unless he is a retired lawyer with nothing but time on his hands]. In my experience, most buyers are not even aware that they paid a dealer fee. It is buried in the morass of legitimate local, state, and federal fees.
Another element of Florida law is that the dealer fee must be included in the price of a specific advertised car. This law is simply being ignored by many car dealers. If you doubt this, just pick up a copy of any local Florida news paper and read the fine print in the car ads. In my local paper, The Palm Beach Post, about half the ads do not include the dealer fee in the price. But, even if it is included, it’s still a “gotcha”. That’s because dealers will advertise just one, or maybe two, cars at that price. That number that you see next to the picture of the car is the stock number of one particular vehicle. You have two chances of buying that particular car…slim and none. In the first place there’s only one or two of these cars and in the second place the salesman is typically paid no commission for selling this car. How can you believe him when he says, “That car has been sold”? If you don’t believe him what is there you can do about it? The salesman will tell you that he can show you one exactly like it. The only problem now is that the dealer can legally add the dealer fee to the advertised price you are expecting because it was not the advertised car. Of course, that’s the whole idea behind the ad.
Another Florida law associated with dealer fees is that the dealer must charge every customer the dealer fee if he charges just one customer. This is a really stupid law that probably was well intended when it was passed. It’s stupid because it provides the dealer with an excuse when the occasional astute car buyer spots the fact that the dealer fee is really only more profit for the dealer and not an official fee. The salesman tells the objecting customer, “I’m sorry but Florida law prohibits us from removing the dealer fee from our invoice”. This is only technically true because the salesman can always decrease the price of the car by the amount of the dealer fee which is perfectly legal. This almost never happens because salesmen are not paid on the profit the dealer realizes from the dealer fee. They typically earn 25% of the profit on the car. If the salesman reduces the price of the car by the amount of the dealer fee, 25% of that amount comes out of his pocket.
Now, I have a confession to make. I know of only one other dealer in South Florida that doesn’t charge a dealer fee…Sawgrass Ford. Since I stopped charging a dealer fee several years ago my business has soared. I’m making less on each car but I’m selling a lot more cars. I have a huge competitive advantage over virtually every car dealer in Florida. My confession is this. I truly have mixed emotions [Like seeing your mother-in-law drive your new Lexus Ls 460 over a cliff] about Ken Pruitt and his Senate Committee succeeding in making dealer fees illegal. On the one hand, I know it’s the right thing to do because the dealer fee is a deceptive sales practice. On the other hand, banning the dealer fee removes a great competitive advantage.
If you are a reader of my weekly column in the Hometown News, a reader of my Blog, http://www.earlstewartoncars.com/, or a listener to my weekly radio show [9 AM every Saturday on Seaview AM 960], you already know all about dealer fees. If not, dealer fees are profit for the car dealer disguised as an official fee. The disguise consists of naming this profit documentary fee, doc fee, dealer prep fee, pre-delivery fee, dealer fee, etc. Some dealers use a combination. These fees vary from as little as $500 to nearly $1,000. In fact, there is no legal limit on the amount of these fees. Theoretically a dealer could charge you $10,000 or more!
I discuss this in a recent television ad you can view at http://www.youtube.com/watch?v=JeIuFEMgWJs
Florida law currently has some regulation on dealer fees. The amount of the fee must be printed on the buyer’s order, next to the real fees, like sales tax and licenses. Next to the dealer fee must be printed “These charges represent costs and profit to dealer”. This statement is misleading because it says costs and profits. Obviously, when the dealer charges you money to cover some of his expenses, you are increasing his profits. The statement should be, “These charges represent profit for the dealer” period. You know how many pieces of paper are involved in buying a car…lots and lots. A car buyer cannot possibly read every document he signs [unless he is a retired lawyer with nothing but time on his hands]. In my experience, most buyers are not even aware that they paid a dealer fee. It is buried in the morass of legitimate local, state, and federal fees.
Another element of Florida law is that the dealer fee must be included in the price of a specific advertised car. This law is simply being ignored by many car dealers. If you doubt this, just pick up a copy of any local Florida news paper and read the fine print in the car ads. In my local paper, The Palm Beach Post, about half the ads do not include the dealer fee in the price. But, even if it is included, it’s still a “gotcha”. That’s because dealers will advertise just one, or maybe two, cars at that price. That number that you see next to the picture of the car is the stock number of one particular vehicle. You have two chances of buying that particular car…slim and none. In the first place there’s only one or two of these cars and in the second place the salesman is typically paid no commission for selling this car. How can you believe him when he says, “That car has been sold”? If you don’t believe him what is there you can do about it? The salesman will tell you that he can show you one exactly like it. The only problem now is that the dealer can legally add the dealer fee to the advertised price you are expecting because it was not the advertised car. Of course, that’s the whole idea behind the ad.
Another Florida law associated with dealer fees is that the dealer must charge every customer the dealer fee if he charges just one customer. This is a really stupid law that probably was well intended when it was passed. It’s stupid because it provides the dealer with an excuse when the occasional astute car buyer spots the fact that the dealer fee is really only more profit for the dealer and not an official fee. The salesman tells the objecting customer, “I’m sorry but Florida law prohibits us from removing the dealer fee from our invoice”. This is only technically true because the salesman can always decrease the price of the car by the amount of the dealer fee which is perfectly legal. This almost never happens because salesmen are not paid on the profit the dealer realizes from the dealer fee. They typically earn 25% of the profit on the car. If the salesman reduces the price of the car by the amount of the dealer fee, 25% of that amount comes out of his pocket.
Now, I have a confession to make. I know of only one other dealer in South Florida that doesn’t charge a dealer fee…Sawgrass Ford. Since I stopped charging a dealer fee several years ago my business has soared. I’m making less on each car but I’m selling a lot more cars. I have a huge competitive advantage over virtually every car dealer in Florida. My confession is this. I truly have mixed emotions [Like seeing your mother-in-law drive your new Lexus Ls 460 over a cliff] about Ken Pruitt and his Senate Committee succeeding in making dealer fees illegal. On the one hand, I know it’s the right thing to do because the dealer fee is a deceptive sales practice. On the other hand, banning the dealer fee removes a great competitive advantage.
Friday, September 21, 2007
Positive Backlash to Negativism on Hispanic TV Commercial
I wasn’t going to write another column about the TV commercial that I did a couple of months ago in which I spoke Spanish with English subtitles but recent developments changed my mind.
I aired the commercial on English speaking TV channels, not Hispanic. Just in case you were out of the country or were somehow totally incommunicado for the past two months, there was a hue and cry to this ad like I’ve never seen to any commercial I’ve done in my 40+ years as a car dealer. It started with lots of very negative phone calls to me and the TV channels. One TV channel, fearing controversy, initially refused to run my commercial, but recanted when I threatened them with exposing their refusal to run my ad to their competition and the FCC. The negative groundswell grew to emails and letters. I have to admit that during the first two or three weeks, I began to doubt that I was doing the right thing. Almost every call, email, or letter threatened me with boycotting my dealership. After all, I’m a car dealer and my commercial was meant to help me sell more Toyotas, not make a political statement.
The negativism grew so intense that the media picked up on it. The Ft. Lauderdale Sun Sentinel did a feature story on this, documenting a lot of the negative ads. The Palm Beach Post followed suit with a similar story. Channel 5 TV ran several news stories. Fox News interviewed me and this was carried on the network, nationwide, as well as XM and Sirius worldwide. Magazines, the Internet chat groups, blogs, World Net Daily, YouTube, and about every other kind of media jumped on this story.
That’s when the “positive backlash” began. What I had hoped for actually came to pass. The “silent majority” that we always hear about suddenly found their voice. The average American is a good person without prejudice and has lots of common sense, but she doesn’t get motivated enough from a TV commercial to make phone calls or send emails. The average American does get motivated when she sees someone being unjustly accused of being a traitor, called vulgar names, and being threatened with boycotts to his business. These good folks rallied to my support and now I am getting a steady flow of emails, blog postings, and phone calls supporting my Hispanic TV ad. The negative comments have died off to an occasional whimper.
Ironically, my initial motivation was only to sell more Toyotas. Not only did I do this [Last month I sold 375 new Toyotas, one of the best months in my 32 years as a Toyota dealer], but I got a bonus. That was a much better understanding of what makes us Americans tick. Don’t get me wrong. I was always proud to be an American, but after so many people sprang to my defense, after I was so viciously attached because of my Hispanic TV commercial, I was even more proud. Americans like to root for the underdog and they believe in standing up for what’s right. When they saw me being piled on by a bunch of nuts and bigots (not all of them were of this ilk; a few were simply uninformed or misunderstood my ad). 99% of Americans understand that we are all immigrants; we only differ in how long ago we, our parents, grandparents, et al were fortunate enough to find sanctuary in the land of the free and the home of the brave.
I aired the commercial on English speaking TV channels, not Hispanic. Just in case you were out of the country or were somehow totally incommunicado for the past two months, there was a hue and cry to this ad like I’ve never seen to any commercial I’ve done in my 40+ years as a car dealer. It started with lots of very negative phone calls to me and the TV channels. One TV channel, fearing controversy, initially refused to run my commercial, but recanted when I threatened them with exposing their refusal to run my ad to their competition and the FCC. The negative groundswell grew to emails and letters. I have to admit that during the first two or three weeks, I began to doubt that I was doing the right thing. Almost every call, email, or letter threatened me with boycotting my dealership. After all, I’m a car dealer and my commercial was meant to help me sell more Toyotas, not make a political statement.
The negativism grew so intense that the media picked up on it. The Ft. Lauderdale Sun Sentinel did a feature story on this, documenting a lot of the negative ads. The Palm Beach Post followed suit with a similar story. Channel 5 TV ran several news stories. Fox News interviewed me and this was carried on the network, nationwide, as well as XM and Sirius worldwide. Magazines, the Internet chat groups, blogs, World Net Daily, YouTube, and about every other kind of media jumped on this story.
That’s when the “positive backlash” began. What I had hoped for actually came to pass. The “silent majority” that we always hear about suddenly found their voice. The average American is a good person without prejudice and has lots of common sense, but she doesn’t get motivated enough from a TV commercial to make phone calls or send emails. The average American does get motivated when she sees someone being unjustly accused of being a traitor, called vulgar names, and being threatened with boycotts to his business. These good folks rallied to my support and now I am getting a steady flow of emails, blog postings, and phone calls supporting my Hispanic TV ad. The negative comments have died off to an occasional whimper.
Ironically, my initial motivation was only to sell more Toyotas. Not only did I do this [Last month I sold 375 new Toyotas, one of the best months in my 32 years as a Toyota dealer], but I got a bonus. That was a much better understanding of what makes us Americans tick. Don’t get me wrong. I was always proud to be an American, but after so many people sprang to my defense, after I was so viciously attached because of my Hispanic TV commercial, I was even more proud. Americans like to root for the underdog and they believe in standing up for what’s right. When they saw me being piled on by a bunch of nuts and bigots (not all of them were of this ilk; a few were simply uninformed or misunderstood my ad). 99% of Americans understand that we are all immigrants; we only differ in how long ago we, our parents, grandparents, et al were fortunate enough to find sanctuary in the land of the free and the home of the brave.
Friday, September 14, 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
Friday, September 07, 2007
QUICK REFERENCE GUIDE TO FINE PRINT IN CAR ADS
If you look down at the bottom of virtually every car advertisement in your local newspaper, you will see some fine print. Sometimes you literally cannot read the print because it is so small. The disclaimers you read below were taken from today’s PB Post. I didn’t make any of these up. Basically what these disclaimers do is to totally negate the validity of all of the prices and payments the car dealers are advertising. The prices and payments are always much higher when you factor in the almost invisible fine print.
Combining a very short lease term with a high down payment. Nothing sells cars like low monthly payments. A car dealer can make a monthly lease payment as low as he wants by both reducing the number of months of the lease and increasing the down payment. I’m looking at an ad in the PB Post right now advertising an SUV for $19,999 or just $199 per month. In the fine print it says 27 month lease and $3,000 down plus a $799 dealer fee.
"Plus dealer installed options" The price you see advertised in the paper is not the full price. This loophole allows the dealer to tack on thousands of dollars in overpriced accessories to the price that was advertised.
"With approved credit". The lease payment or purchase payment you see advertised is based on someone with very, very good credit. Sometimes the ad will specify a minimum Beacon score of 750 or even 760. An almost negligible percent of people have a credit score that high. This payment gets you in the door and then they tell you your credit isn’t good enough to qualify for that payment.
"Advertised offer good on select in-stock vehicles only" Dealers often advertise just one car at a price below their cost. They don’t pay the salesman a commission if he sells that vehicle. The chances of that car being available for you to buy are “slim and none”. Even if the car was still there, the salesman would do everything in his power to sell you a different car that he could earn a commission on.
"Owner Loyalty Rebate". Manufacturers offer special cash rebates to current owners of their car. These rebates are not available to you if you don’t currently own that particular make of car. For example, if you own a Honda, and want to buy a Toyota, you don’t qualify for a Toyota loyalty rebate. That price you see advertised won’t be available.
"Price …plus, tax, tag, and fees". The red flag word here is “fees”. The fees these dealers refer to is a “dealer fee” which is synonymous for dealer profit. Most people think it’s a federal or state tax of some kind. It’s nothing more than more money for the dealer that is not disclosed in the price of the car.
"Offers expire date of publication or may be cancelled at any time without notice". This simply means that the prices, payments, etc. you have read have no validity whatsoever. The prices are not good tomorrow, but they aren’t even any good today because the dealer can cancel the offer without notice.
"Not responsible for typographical errors". This is just one more way for a dealer to explain why they can’t sell you the car for the advertised price…We don’t have to honor that price because it was a “typographical error”.
"Vehicle Art for illustrations only". This means that that car you are looking at with the really great looking wheels might not have those wheels on the one you buy. Or, maybe it doesn’t even have that sunroof you see in the picture.
"Minimum trade based on dealer list price". The dealer list price is not the same thing as the manufacturer’s suggest price. Dealers add markups to the Monroney label also known as MSRP or manufacturer’s suggested retail price. They label this markup (often on a sticker designed to imitate the official federal Monroney label). Dealer markups of $3,000 and much more are common on such “counterfeit Monroney” labels. In this case, the dealer has marked up the MSRP far enough so that he can offer a minimum $10,000 trade-in allowance.
My advice to you is to ignore all car dealers’ newspaper advertising. Most car ads are designed to “get you in the door” so that they can sell you some other car than the one advertised so that they can make more money. If you must respond to a dealer’s newspaper ad, please be sure you break out your magnifying glass and carefully read the fine print.
Combining a very short lease term with a high down payment. Nothing sells cars like low monthly payments. A car dealer can make a monthly lease payment as low as he wants by both reducing the number of months of the lease and increasing the down payment. I’m looking at an ad in the PB Post right now advertising an SUV for $19,999 or just $199 per month. In the fine print it says 27 month lease and $3,000 down plus a $799 dealer fee.
"Plus dealer installed options" The price you see advertised in the paper is not the full price. This loophole allows the dealer to tack on thousands of dollars in overpriced accessories to the price that was advertised.
"With approved credit". The lease payment or purchase payment you see advertised is based on someone with very, very good credit. Sometimes the ad will specify a minimum Beacon score of 750 or even 760. An almost negligible percent of people have a credit score that high. This payment gets you in the door and then they tell you your credit isn’t good enough to qualify for that payment.
"Advertised offer good on select in-stock vehicles only" Dealers often advertise just one car at a price below their cost. They don’t pay the salesman a commission if he sells that vehicle. The chances of that car being available for you to buy are “slim and none”. Even if the car was still there, the salesman would do everything in his power to sell you a different car that he could earn a commission on.
"Owner Loyalty Rebate". Manufacturers offer special cash rebates to current owners of their car. These rebates are not available to you if you don’t currently own that particular make of car. For example, if you own a Honda, and want to buy a Toyota, you don’t qualify for a Toyota loyalty rebate. That price you see advertised won’t be available.
"Price …plus, tax, tag, and fees". The red flag word here is “fees”. The fees these dealers refer to is a “dealer fee” which is synonymous for dealer profit. Most people think it’s a federal or state tax of some kind. It’s nothing more than more money for the dealer that is not disclosed in the price of the car.
"Offers expire date of publication or may be cancelled at any time without notice". This simply means that the prices, payments, etc. you have read have no validity whatsoever. The prices are not good tomorrow, but they aren’t even any good today because the dealer can cancel the offer without notice.
"Not responsible for typographical errors". This is just one more way for a dealer to explain why they can’t sell you the car for the advertised price…We don’t have to honor that price because it was a “typographical error”.
"Vehicle Art for illustrations only". This means that that car you are looking at with the really great looking wheels might not have those wheels on the one you buy. Or, maybe it doesn’t even have that sunroof you see in the picture.
"Minimum trade based on dealer list price". The dealer list price is not the same thing as the manufacturer’s suggest price. Dealers add markups to the Monroney label also known as MSRP or manufacturer’s suggested retail price. They label this markup (often on a sticker designed to imitate the official federal Monroney label). Dealer markups of $3,000 and much more are common on such “counterfeit Monroney” labels. In this case, the dealer has marked up the MSRP far enough so that he can offer a minimum $10,000 trade-in allowance.
My advice to you is to ignore all car dealers’ newspaper advertising. Most car ads are designed to “get you in the door” so that they can sell you some other car than the one advertised so that they can make more money. If you must respond to a dealer’s newspaper ad, please be sure you break out your magnifying glass and carefully read the fine print.
Monday, September 03, 2007
Earl Stewart's Response to Typical Critics of Spanish Ad
Dear E and M,
Thanks very much for voicing your opinion. Because your remarks are so typical of those who object to my Spanish-speaking TV commercial, I have taken the liberty of posting this email on my Blog, http://www.earlstewartoncars.com/. You might enjoy reading some of the postings.
E's & M's comments in blue italic:
We are offended by your Spanish TV commercial and believe the way you went about it is anti-American.We want to respond to some of your posted explanations for showing the commercial on ENGLISH TV:
I am truly sorry that I offended you. It was not my intent and I, too, believe strongly in what I have done and don’t believe I’m wrong…just as strongly as you take the opposite view.
You say you are not targeting Spanish speaking people, why he Spanish commercials then?If virtually all Hispanics living here in Palm Beach Co. are bilingual and fluent in both Spanish and ENGLISH, why the Spanish commercial?
There are four reasons why I chose to speak Spanish in my commercials on English speaking TV:
(1) The market research I did showed that most Hispanics living in Palm Beach County watch English speaking TV channels almost exclusively. This is because there are very few Spanish channels…only 6 in total in all of South Florida and they all originate from Miami. The programming on these channels is far inferior in quality and diversity to the dozens of English speaking channels. Bilingual Hispanic American citizens, just like you and I, prefer to watch better quality and more variety on their TV.
(2) Anyone who has traveled abroad will tell you that it is considered a sign of respect to address bilingual citizens of other countries (virtually all citizens of other countries are at least bilingual and most speak English) in their native tongue. Those Americans who travel abroad and “expect” everybody to be able to speak English is one of the reasons for the phrase “Ugly American”. By learning a few phrases in the language of the country you are visiting and attempting to speak it is a courtesy and a sign of respect.
(3) By speaking Spanish in my commercial, I was able to “cut the clutter” of the too large number of commercials that most people (including me) ignore. I mute out most commercials or change channels. I wanted to get peoples attention which is the primary goal of any advertiser.
(4) Ads on Spanish channels are much more expensive than ads on Palm Beach County channels because they all originate from Miami and cover a much large audience in all of South Florida. A 30 second commercial on a local PB County channel is about $350 compared to about $5,000 for a Spanish channel. I’m wasting my money by advertising to all of the Hispanics in Dade and Broward…especially when my market research has told me that most are watching English channels anyhow.
Hell yea, the commercial get's the attention of the illegal Hispanic's attention. You are speaking the language they want to ALWAYS speak.Funny how you may not have gotten their (Hispanic's) attention if you spoke ENGLISH, when you say most are fluent in ENGLISH?Also, why is there a vast audience on Spanish channels when you say most are fluent in ENGLISH - again because they don't want to speak the language of the USA - ENGLISH!!
I am not trying to advertise to illegal aliens if or no other reason than they can’t buy new Toyotas. They don’t even have driver’s licensees and they can’t afford to buy a new car. Illegal aliens comprise only a small fraction of the Palm Beach County Hispanic community.
Yes, America is the land of free enterprise and capitalism, but America is much more than that.As part of our identity, Border - Language - Culture, we feel you are helping to destroy it. Do you realize how important it is being united by one common language? We are not talking about what you speak or sing in church, your home, another country, but here, the USA as a united country?
Do you think we should pass a law making it illegal to speak another language except English except in church or another country? We are united in America by a lot of things, including our common language. Far more important than a common language is our freedom and freedom means our right to express ourselves freely without fear of oppression. If a free American citizen wishes to speak German, Italian, or Japanese to another person who welcomes this, she should be allowed to express herself in this manner even if you don’t like to listen to it.
You say in one of your post that there are very few illegal aliens (there not illegal immigrants, as immigrants are legal) and they can't buy cars - WHAT ARE YOU SMOKING????
What kind of a trite response is, “WHAT ARE YOU SMOKING????” Quit being cute and try to deal with the facts. In South Florida there are nearly two million American citizens of Hispanic descent, aka legal immigrants. These are the folks I’m advertising to. In South Florida, the best estimate of the number of Hispanics who entered illegally is less than 100,000. These illegal immigrants have very low paying jobs, no driver’s licenses, cannot obtain credit, and CANNOT BUY A CAR.
If you respect people by speaking in their native tongue, which should be insulting to those that have accepted America as their new identity, why did you disrespect us American's by showing the commercial on ENGLISH TV????? You can put your tongue on THIS!
First let me say that your vulgar references do not enhance the credibility of your argument. If you feel I have shown you a lack of respect by speaking Spanish in a 30 second TV commercial, I suggest that you look into your heart for the answer as to why you feel that the Spanish language is offensive to you.
You should thank about moving your business to where the national language is Spanish, as we want miss you, your business, or your commercial.There are always traitors to this country, and you always will be Earl.
My business is thriving. Last month I sold 477 cars, one of the best months in my 32 years as a Toyota dealer. My sales to Hispanics and non Hispanics has increased considerably since I began running my Spanish speaking TV ad. There is no reason for me to move the location of my dealership. In fact, I have just embarked on a major expansion…more than doubling my present size.
Once again, I won’t dignify your name calling with a reply, but I will say again that it does not enhance your credibility to our readers
Thanks very much for voicing your opinion. Because your remarks are so typical of those who object to my Spanish-speaking TV commercial, I have taken the liberty of posting this email on my Blog, http://www.earlstewartoncars.com/. You might enjoy reading some of the postings.
E's & M's comments in blue italic:
We are offended by your Spanish TV commercial and believe the way you went about it is anti-American.We want to respond to some of your posted explanations for showing the commercial on ENGLISH TV:
I am truly sorry that I offended you. It was not my intent and I, too, believe strongly in what I have done and don’t believe I’m wrong…just as strongly as you take the opposite view.
You say you are not targeting Spanish speaking people, why he Spanish commercials then?If virtually all Hispanics living here in Palm Beach Co. are bilingual and fluent in both Spanish and ENGLISH, why the Spanish commercial?
There are four reasons why I chose to speak Spanish in my commercials on English speaking TV:
(1) The market research I did showed that most Hispanics living in Palm Beach County watch English speaking TV channels almost exclusively. This is because there are very few Spanish channels…only 6 in total in all of South Florida and they all originate from Miami. The programming on these channels is far inferior in quality and diversity to the dozens of English speaking channels. Bilingual Hispanic American citizens, just like you and I, prefer to watch better quality and more variety on their TV.
(2) Anyone who has traveled abroad will tell you that it is considered a sign of respect to address bilingual citizens of other countries (virtually all citizens of other countries are at least bilingual and most speak English) in their native tongue. Those Americans who travel abroad and “expect” everybody to be able to speak English is one of the reasons for the phrase “Ugly American”. By learning a few phrases in the language of the country you are visiting and attempting to speak it is a courtesy and a sign of respect.
(3) By speaking Spanish in my commercial, I was able to “cut the clutter” of the too large number of commercials that most people (including me) ignore. I mute out most commercials or change channels. I wanted to get peoples attention which is the primary goal of any advertiser.
(4) Ads on Spanish channels are much more expensive than ads on Palm Beach County channels because they all originate from Miami and cover a much large audience in all of South Florida. A 30 second commercial on a local PB County channel is about $350 compared to about $5,000 for a Spanish channel. I’m wasting my money by advertising to all of the Hispanics in Dade and Broward…especially when my market research has told me that most are watching English channels anyhow.
Hell yea, the commercial get's the attention of the illegal Hispanic's attention. You are speaking the language they want to ALWAYS speak.Funny how you may not have gotten their (Hispanic's) attention if you spoke ENGLISH, when you say most are fluent in ENGLISH?Also, why is there a vast audience on Spanish channels when you say most are fluent in ENGLISH - again because they don't want to speak the language of the USA - ENGLISH!!
I am not trying to advertise to illegal aliens if or no other reason than they can’t buy new Toyotas. They don’t even have driver’s licensees and they can’t afford to buy a new car. Illegal aliens comprise only a small fraction of the Palm Beach County Hispanic community.
Yes, America is the land of free enterprise and capitalism, but America is much more than that.As part of our identity, Border - Language - Culture, we feel you are helping to destroy it. Do you realize how important it is being united by one common language? We are not talking about what you speak or sing in church, your home, another country, but here, the USA as a united country?
Do you think we should pass a law making it illegal to speak another language except English except in church or another country? We are united in America by a lot of things, including our common language. Far more important than a common language is our freedom and freedom means our right to express ourselves freely without fear of oppression. If a free American citizen wishes to speak German, Italian, or Japanese to another person who welcomes this, she should be allowed to express herself in this manner even if you don’t like to listen to it.
You say in one of your post that there are very few illegal aliens (there not illegal immigrants, as immigrants are legal) and they can't buy cars - WHAT ARE YOU SMOKING????
What kind of a trite response is, “WHAT ARE YOU SMOKING????” Quit being cute and try to deal with the facts. In South Florida there are nearly two million American citizens of Hispanic descent, aka legal immigrants. These are the folks I’m advertising to. In South Florida, the best estimate of the number of Hispanics who entered illegally is less than 100,000. These illegal immigrants have very low paying jobs, no driver’s licenses, cannot obtain credit, and CANNOT BUY A CAR.
If you respect people by speaking in their native tongue, which should be insulting to those that have accepted America as their new identity, why did you disrespect us American's by showing the commercial on ENGLISH TV????? You can put your tongue on THIS!
First let me say that your vulgar references do not enhance the credibility of your argument. If you feel I have shown you a lack of respect by speaking Spanish in a 30 second TV commercial, I suggest that you look into your heart for the answer as to why you feel that the Spanish language is offensive to you.
You should thank about moving your business to where the national language is Spanish, as we want miss you, your business, or your commercial.There are always traitors to this country, and you always will be Earl.
My business is thriving. Last month I sold 477 cars, one of the best months in my 32 years as a Toyota dealer. My sales to Hispanics and non Hispanics has increased considerably since I began running my Spanish speaking TV ad. There is no reason for me to move the location of my dealership. In fact, I have just embarked on a major expansion…more than doubling my present size.
Once again, I won’t dignify your name calling with a reply, but I will say again that it does not enhance your credibility to our readers
Friday, August 31, 2007
OPEN LETTER TO CAR MANUFACTURERS
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
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 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.
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