This is an update to a column that originally ran about a year and a half ago, December 8, 2006. I’m continuing to get daily phone calls from car buyers who mostly have “already bought a car”. The “horse is already out of the barn” and they want me to give them advice on how to get it back. The vast majority of these car buyers went car shopping and bought their car alone. The majority of the complaints have to do with verbal promises by the sales person, not committed to writing. Bringing at least one other person when you are car shopping doesn’t negate the importance of getting all promises in writing, but substantially lowers the chances of a car salesman trying to pull a fast one. The salesman and his manager know that, in court, two people’s word trumps that of one.
A woman wrote me a letter this week in response to one of my columns. Her husband had recently passed away and this was the first car she had bought on her own. The dealer did not have the model car with the accessories she wanted and was unable to locate one at another dealership. She did not want to make a decision without seeing the actual car she wanted to buy but the salesman and manger talked her into signing a buyer’s order, assuring her that she was under no obligation to buy. They also included two accessories that she did not want because “the manufacturer required it”. I’ve heard of distributors ordering cars with certain accessories from the manufacturer which essentially makes them “standard”, but never “$250 floor mats” which was one of the accessories she mentioned. I get a lot of emails, phone calls, and letters from people who made a bad deal in their car purchase and want to know how they can get out of it. This is actually one of the less egregious, but I chose it because it was a simpler and shorter example.
There is strength in numbers when shopping and negotiating to buy a car. In fact, this applies to any serious decision in life. You might be the sharpest, shrewdest negotiator on the block, but your odds of striking a better deal and not get taken advantage of are enhanced when you have others on your side. Personally, I make a habit of always having at least one partner when I am engaged in a serious, adversarial decision making process. When meeting with those on the other side, I make it a point to arrive with at least as many people as they have present. One reason is the psychological factor. When you are in an office by yourself with 2 or 3 others, it can be intimidating. Another reason is that you always have people on your side to corroborate what was said. If a salesman or a sales manager makes a verbal promise that can be corroborated by a friend or two, it is far less likely to be broken. It will also hold up in court, if it has to come to that. Of course, the better solution is to see that all promises are committed to writing.
Buying a car, especially a new car is more often than not, an emotional decision. Having a friend or two with you can help you make more of an analytical, logical decision. Another point of view is always useful when making an important decision. Also, having one or two friends with you slows down the process to a level more easily absorbed and understood by you. A friend will often think of a question you should have asked but forgot.
Ideally you should bring someone with you who is skilled in negotiation and experienced in buying cars. However, if you don’t know someone like that, somebody is better than nobody.
By the way, most car dealers are unhappy when prospective customers bring in advisors and friends. Naturally they feel that way because they recognize their chances of making a fast, very profitable sale are diminished.
Monday, July 28, 2008
Saturday, July 19, 2008
WHAT YOU NEED TO KNOW ABOUT GAS GUZZLERS
Our country is experiencing a watershed moment in its history. The cost of gasoline has finally reached a threshold of economic pain causing the American driver to begin evolving from her love affair with the SUV, pickup truck, and van into smaller gas efficient cars and hybrids.
But, there are still a huge number of these gas guzzlers on the roads, in dealers’ inventories, and parked in driveways and garages. What will become of these behemoths? You can be sure of one thing, they won’t just disappear overnight. Eventually they will be sold and, of course, that means somebody will buy them. Because of the rapidity with which gas prices rose recently, the demand for gas guzzlers evaporated virtually overnight. CarMax, the largest seller of used cars in the world, said that the value of SUV’s, pickups, and vans dropped more in the last 3 months than they would normally drop in a year.
In my opinion, the values have plummeted even more that this. CarMax judges wholesale values of vehicles based on those that are bought and sold at wholesale auctions. There are hundreds of thousands of gas guzzlers sitting on car dealers’ lots which, under normal conditions, would be going to the auctions for sale, but are not. Why? Because car dealers are in a state of denial. Imagine being a used car manager whose total compensation is a percentage of the profit he produces on his retail and wholesale profits every month. Three months ago his inventory of 100 vehicles was worth two million dollars. Suddenly it’s worth 1.6 million dollars…a loss of $400,000. But right now that’s only a “paper loss” and that used car manager, general manager, and dealer only realize the loss if they take these vehicles to the auction and sell them to the highest bidder. If they keep them on the used car lot they can “pretend they’re worth more” or “hope” that the value of gas guzzlers will rise. By not taking the true loss, their paychecks and the company’s financial statement aren’t affected.
What does all this mean for you? If you are one who actually needs an SUV, pickup, or van, [for your business, tow your boat, accomodate a large family] it’s not a good time to buy a used one from a dealer. The dealers’ cost on gas guzzlers on his lot is vastly inflated because of the dealers’ refusal to accept reality. The dealers’ retail prices of gas guzzlers are based on a markup from an inflated cost which leads to an inflated retail price. This is similar to what has happened in Florida, California, and Arizona with housing prices. Sellers are in denial about how far the value of their homes have dropped and are just sitting on unrealistically high prices, praying for a miracle. This means that home sales have virtually stopped in these states. Gas guzzlers will begin to sell at a normal pace when their prices finally come down to the market value. That is the time to buy a gas guzzler if you need one. When this time will arrive is hard to predict, but it will happen a lot faster than it’s happening with housing. I’m sure that you will have some great buying opportunities for used gas guzzlers by the end of this year. Unfortunately some of those opportunities will be the result of banks being forced to liquidate bankrupt dealers’ used car inventories.
Be very dubious of offers on the radio, TV, or the newspaper for gas guzzlers that seem “too good to be true”. There are a huge number of cheap gas offers tied to the sale of gas guzzlers. Chrysler Corp. is offering $2.99 gas for three years, but read the fine print. The mileage is limited as are the models it applies to, and the actual dollar value of the offer is less than the rebates that Chrysler is also offering. You must choose only one…the rebates or the gas card. People are better off to take the rebates and pass on the $2.99 gas card. Chrysler knows this and is using the gas card just to “get you in the door”. Dealers are advertising even greater “free or cheap gas scams”. One local dealer is offering $500 worth of free gas just for a demonstration ride. The fine print says, “while supplies last” and only one $500 in gas will be given away every 90 days”. Another local dealer is advertising gas for 99 cents per gallon. The fine print says this is just for 6 months and to accept this offer you waive all discounts and rebates. Just remember there is no such thing as a free lunch.
Another trick that dealers are using to lure you in to trade in your gas guzzler on a new vehicle is a high fake trade-in allowance for gas guzzlers. They accomplish this by marking up their new vehicles thousands of dollars over MSRP, so that they can show you a bogus high trade-in allowance for your gas guzzler. In the fine print you will find that the discount is from “Dealer List Price”, not the manufacturer’s. You may have also seen the advertised very high “minimum trade-in allowance”…$3,500 or even $5,000. If you have to sell your gas guzzler now, you are better off to seek a private buyer or sell it on Ebay.
If you must have a gas guzzler from a dealer today, it’s safer to buy a new one than a used. The reason for this is that the manufacturers have been more realistic in dropping the prices of new gas guzzlers than dealers have dropping the prices of used. Furthermore, I highly recommend that you lease a gas guzzler rather than buy one. This is because the banks and leasing companies have been slow to adjust the residual values in their leases down. This means a lower lease payment for you. Also, who knows how much further gas guzzlers will decline in value. Suppose, God forbid, we see $8.00 a gallon gas? I you own a gas guzzler, you are stuck with the lower value. If you lease it, you can walk away from it and leave the bank to take the loss.
But, there are still a huge number of these gas guzzlers on the roads, in dealers’ inventories, and parked in driveways and garages. What will become of these behemoths? You can be sure of one thing, they won’t just disappear overnight. Eventually they will be sold and, of course, that means somebody will buy them. Because of the rapidity with which gas prices rose recently, the demand for gas guzzlers evaporated virtually overnight. CarMax, the largest seller of used cars in the world, said that the value of SUV’s, pickups, and vans dropped more in the last 3 months than they would normally drop in a year.
In my opinion, the values have plummeted even more that this. CarMax judges wholesale values of vehicles based on those that are bought and sold at wholesale auctions. There are hundreds of thousands of gas guzzlers sitting on car dealers’ lots which, under normal conditions, would be going to the auctions for sale, but are not. Why? Because car dealers are in a state of denial. Imagine being a used car manager whose total compensation is a percentage of the profit he produces on his retail and wholesale profits every month. Three months ago his inventory of 100 vehicles was worth two million dollars. Suddenly it’s worth 1.6 million dollars…a loss of $400,000. But right now that’s only a “paper loss” and that used car manager, general manager, and dealer only realize the loss if they take these vehicles to the auction and sell them to the highest bidder. If they keep them on the used car lot they can “pretend they’re worth more” or “hope” that the value of gas guzzlers will rise. By not taking the true loss, their paychecks and the company’s financial statement aren’t affected.
What does all this mean for you? If you are one who actually needs an SUV, pickup, or van, [for your business, tow your boat, accomodate a large family] it’s not a good time to buy a used one from a dealer. The dealers’ cost on gas guzzlers on his lot is vastly inflated because of the dealers’ refusal to accept reality. The dealers’ retail prices of gas guzzlers are based on a markup from an inflated cost which leads to an inflated retail price. This is similar to what has happened in Florida, California, and Arizona with housing prices. Sellers are in denial about how far the value of their homes have dropped and are just sitting on unrealistically high prices, praying for a miracle. This means that home sales have virtually stopped in these states. Gas guzzlers will begin to sell at a normal pace when their prices finally come down to the market value. That is the time to buy a gas guzzler if you need one. When this time will arrive is hard to predict, but it will happen a lot faster than it’s happening with housing. I’m sure that you will have some great buying opportunities for used gas guzzlers by the end of this year. Unfortunately some of those opportunities will be the result of banks being forced to liquidate bankrupt dealers’ used car inventories.
Be very dubious of offers on the radio, TV, or the newspaper for gas guzzlers that seem “too good to be true”. There are a huge number of cheap gas offers tied to the sale of gas guzzlers. Chrysler Corp. is offering $2.99 gas for three years, but read the fine print. The mileage is limited as are the models it applies to, and the actual dollar value of the offer is less than the rebates that Chrysler is also offering. You must choose only one…the rebates or the gas card. People are better off to take the rebates and pass on the $2.99 gas card. Chrysler knows this and is using the gas card just to “get you in the door”. Dealers are advertising even greater “free or cheap gas scams”. One local dealer is offering $500 worth of free gas just for a demonstration ride. The fine print says, “while supplies last” and only one $500 in gas will be given away every 90 days”. Another local dealer is advertising gas for 99 cents per gallon. The fine print says this is just for 6 months and to accept this offer you waive all discounts and rebates. Just remember there is no such thing as a free lunch.
Another trick that dealers are using to lure you in to trade in your gas guzzler on a new vehicle is a high fake trade-in allowance for gas guzzlers. They accomplish this by marking up their new vehicles thousands of dollars over MSRP, so that they can show you a bogus high trade-in allowance for your gas guzzler. In the fine print you will find that the discount is from “Dealer List Price”, not the manufacturer’s. You may have also seen the advertised very high “minimum trade-in allowance”…$3,500 or even $5,000. If you have to sell your gas guzzler now, you are better off to seek a private buyer or sell it on Ebay.
If you must have a gas guzzler from a dealer today, it’s safer to buy a new one than a used. The reason for this is that the manufacturers have been more realistic in dropping the prices of new gas guzzlers than dealers have dropping the prices of used. Furthermore, I highly recommend that you lease a gas guzzler rather than buy one. This is because the banks and leasing companies have been slow to adjust the residual values in their leases down. This means a lower lease payment for you. Also, who knows how much further gas guzzlers will decline in value. Suppose, God forbid, we see $8.00 a gallon gas? I you own a gas guzzler, you are stuck with the lower value. If you lease it, you can walk away from it and leave the bank to take the loss.
Monday, July 07, 2008
BAIT & SWITCH ADVERTISING
(READ THE FINE PRINT)
All car dealers pay the manufacturers the same prices for their new cars. Dealers will lead you to believe that volume dealers pay less, but this is not true. So, when a car dealer advertises a price for a new car in the newspaper, he has no price advantage over his competition.
Virtually all of the prices for new cars you see advertised in the newspaper are so low that it would be impossible for a dealer to remain in business if he sold more than a very few cars at that price. The reason for this is that, if a dealer advertised realistic prices with a reasonable profit built in, another dealer would advertise a lower price. The dealer who advertised a realistic price is actually helping his competitor sell a car.
Most of the new car prices advertised in the newspaper are below the dealers actual cost. He protects himself by selling very few at this price and counting this loss as a cost of advertising. Next to an advertised car you will see some letters and numbers like, #5632A. That is the “stock number” of the car being advertised. This is all that the dealer does to tell you he has just one at this price. The chances are that if you are not the first person in the dealership on the morning of the ad, this car will be gone.
Look for these two fine print disclosures at the bottom of the ad: (1) Price good on date of publication only. (2) Price good with copy of this ad only. These are just two more ways the dealer can avoid selling you the car at the advertised price.
If you read my last column, you understand about “dealer fees”. These fees are additional dealer profits ranging from $500 to almost $1,000 that are added to the agreed upon price of the car by most dealers in Florida. Florida law requires that this dealer fee be included in the advertised price. When the salesman tells you the advertised car has been sold but he has another one “exactly like it”, he can legally add back on that dealer fee.
As you can guess, the salesman’s commission on an advertised car is either zero or very small. Having a very small incentive to sell an advertised car, he will most likely encourage you to buy any other car.
My recommendation to you is to ignore advertised new car prices. If you must respond to an ad car, call the dealership first and ask if the car is still available. If the answer is no, you have saved yourself a lot of time and aggravation. If the answer is yes, ask if they will hold the car for you. If you have to, offer to give them your credit card for a deposit to hold the car. If they won’t hold the car, save yourself the wasted trip.
The only way to get the best price on a new car is by getting competitive bids from at least 3 car dealers for the exact same year, make, model, and accessorized car with the identical MSRP. You can do this on the Internet, by phone, or in person. Use Consumer Reports magazine, the Internet (www.edmunds.com and www.kbb.com are two excellent free sources of information), or even your local library.
All car dealers pay the manufacturers the same prices for their new cars. Dealers will lead you to believe that volume dealers pay less, but this is not true. So, when a car dealer advertises a price for a new car in the newspaper, he has no price advantage over his competition.
Virtually all of the prices for new cars you see advertised in the newspaper are so low that it would be impossible for a dealer to remain in business if he sold more than a very few cars at that price. The reason for this is that, if a dealer advertised realistic prices with a reasonable profit built in, another dealer would advertise a lower price. The dealer who advertised a realistic price is actually helping his competitor sell a car.
Most of the new car prices advertised in the newspaper are below the dealers actual cost. He protects himself by selling very few at this price and counting this loss as a cost of advertising. Next to an advertised car you will see some letters and numbers like, #5632A. That is the “stock number” of the car being advertised. This is all that the dealer does to tell you he has just one at this price. The chances are that if you are not the first person in the dealership on the morning of the ad, this car will be gone.
Look for these two fine print disclosures at the bottom of the ad: (1) Price good on date of publication only. (2) Price good with copy of this ad only. These are just two more ways the dealer can avoid selling you the car at the advertised price.
If you read my last column, you understand about “dealer fees”. These fees are additional dealer profits ranging from $500 to almost $1,000 that are added to the agreed upon price of the car by most dealers in Florida. Florida law requires that this dealer fee be included in the advertised price. When the salesman tells you the advertised car has been sold but he has another one “exactly like it”, he can legally add back on that dealer fee.
As you can guess, the salesman’s commission on an advertised car is either zero or very small. Having a very small incentive to sell an advertised car, he will most likely encourage you to buy any other car.
My recommendation to you is to ignore advertised new car prices. If you must respond to an ad car, call the dealership first and ask if the car is still available. If the answer is no, you have saved yourself a lot of time and aggravation. If the answer is yes, ask if they will hold the car for you. If you have to, offer to give them your credit card for a deposit to hold the car. If they won’t hold the car, save yourself the wasted trip.
The only way to get the best price on a new car is by getting competitive bids from at least 3 car dealers for the exact same year, make, model, and accessorized car with the identical MSRP. You can do this on the Internet, by phone, or in person. Use Consumer Reports magazine, the Internet (www.edmunds.com and www.kbb.com are two excellent free sources of information), or even your local library.
Saturday, June 28, 2008
When We Make a Mistake
Typically I reserve my blog postings for consumer advice issues. I tend to shy away from mentioning my Toyota dealership directly. I do this to lend credibility to the opinions I publish. However, you may have noticed a lot of dialogue that goes on in the comments section of each posting. One recent comment was left by a customer who was very concerned with an issue that arose with his mother's lease of a new RAV4. His mother was quoted a lease payment when she ordered the vehicle. The problem arose when the salesperson called her to let her know that a mistake was made, and the payment was now $11/month higher. She was, understandably, upset. Her son had leased a vehicle from me recently and had a good experience, so he was also very concerned and angry that the change was made. I forwarded the comments to my general sales manager (who happens to be my son) and asked him to investigate. I have pasted the email correspondence below to illustrate what happens when we make a mistake. I removed last names and the email address/phone number of my customer.
From: Stu Stewart Sent: Tuesday, June 24, 2008 7:52 PMTo: Earl Stewart; Jason StewartCc: Josh StewartSubject: RE: Response to blog
I called and left a voicemail for Mr. K.
The sales manager made a mistake and worked the lease with a bank that does not residualize aftermarket leather. Honoring the original quote means he’d dip $150 into holdback, which he should have done (he was keeping the deal at just $250 over invoice). The RAV is here and the leather is installed. This type of mistake shouldn't have been brought to the customer's attention - we should have absorbed the loss and moved on.
I’m going to apologize, honor the quote at $388, and tell him exactly what happened.
Stu Stewart EARL STEWART TOYOTA1215 US 1 Lake Park, FL 33403V: 561.635.1349 F: 561.863.7536 stus@earlstewarttoyota.com earlstewarttoyota.com
From: Earl Stewart Sent: Tuesday, June 24, 2008 6:19 PMTo: Jason Stewart; Stu StewartCc: Josh Stewart; David SilversteinSubject: FW: Response to blog
Please investigate this and call Mr. K with an explanation.
Thanks,
Dad
From: XXXXX Sent: Tuesday, June 24, 2008 6:10 PMTo: Earl StewartSubject: Response to blog
Mr. Stewart,
I am sorry to respond via email, but I am still very angry about my situation. I just spoke with my mother concerning the call I received today about the increase in the lease price that your salesman quoted us. She wasn’t too pleased either.
I leased a RAV4 from you in February and my mother really likes it. She currently leases a car which the term is up soon. I approached Mr. D on June 12th with the RAV4 model and options that my mother wanted. My mother is on a fixed income, so, there is a limit to what she can pay per month on a lease. After several emails concerning price and options we were able to get the lease price to where it fit her finances. My mother reduced the mileage allowance and gave up the auto sensing mirror in order to get the numbers to work. We received a quote from Mr. D that was $388 per month. My mother agreed to this deal and a deposit of $585 has been paid for the RAV4.
Today I get a call from Mr. D that an error was made on the lease deal and that the best available option is now $399 per month. My mother can’t pay the new amount.
What is curious about the $399 amount? It was the first quote Mr. D gave us and it was with a 15,000/year mileage allowance and the mirror. What is frustrating about this is we spent the two weeks negotiating this and now I have to start over with another dealer and/or vehicle that she likes. She also made an appointment this week to return her current car that she will have to cancel.
Your company sells or leases hundreds of cars a month…so, how can this happen?
Below is a copy of the email where I received the quote or $388.
Sincerely,
Edwin K
Reacting quickly to a mistake like this is crucial. My sales manager made a poor judgement call and made a decision to ask the customer to bear the brunt of his mistake. It was a small amount of money to the dealership, but it was a very big deal for our customer. This afternoon, Edwin's mother took delivery of her new 2008 RAV4 Limited. We have also implemented a process change that will help us prevent something like this from occurring again.
From: Stu Stewart Sent: Tuesday, June 24, 2008 7:52 PMTo: Earl Stewart; Jason StewartCc: Josh StewartSubject: RE: Response to blog
I called and left a voicemail for Mr. K.
The sales manager made a mistake and worked the lease with a bank that does not residualize aftermarket leather. Honoring the original quote means he’d dip $150 into holdback, which he should have done (he was keeping the deal at just $250 over invoice). The RAV is here and the leather is installed. This type of mistake shouldn't have been brought to the customer's attention - we should have absorbed the loss and moved on.
I’m going to apologize, honor the quote at $388, and tell him exactly what happened.
Stu Stewart EARL STEWART TOYOTA1215 US 1 Lake Park, FL 33403V: 561.635.1349 F: 561.863.7536 stus@earlstewarttoyota.com earlstewarttoyota.com
From: Earl Stewart Sent: Tuesday, June 24, 2008 6:19 PMTo: Jason Stewart; Stu StewartCc: Josh Stewart; David SilversteinSubject: FW: Response to blog
Please investigate this and call Mr. K with an explanation.
Thanks,
Dad
From: XXXXX Sent: Tuesday, June 24, 2008 6:10 PMTo: Earl StewartSubject: Response to blog
Mr. Stewart,
I am sorry to respond via email, but I am still very angry about my situation. I just spoke with my mother concerning the call I received today about the increase in the lease price that your salesman quoted us. She wasn’t too pleased either.
I leased a RAV4 from you in February and my mother really likes it. She currently leases a car which the term is up soon. I approached Mr. D on June 12th with the RAV4 model and options that my mother wanted. My mother is on a fixed income, so, there is a limit to what she can pay per month on a lease. After several emails concerning price and options we were able to get the lease price to where it fit her finances. My mother reduced the mileage allowance and gave up the auto sensing mirror in order to get the numbers to work. We received a quote from Mr. D that was $388 per month. My mother agreed to this deal and a deposit of $585 has been paid for the RAV4.
Today I get a call from Mr. D that an error was made on the lease deal and that the best available option is now $399 per month. My mother can’t pay the new amount.
What is curious about the $399 amount? It was the first quote Mr. D gave us and it was with a 15,000/year mileage allowance and the mirror. What is frustrating about this is we spent the two weeks negotiating this and now I have to start over with another dealer and/or vehicle that she likes. She also made an appointment this week to return her current car that she will have to cancel.
Your company sells or leases hundreds of cars a month…so, how can this happen?
Below is a copy of the email where I received the quote or $388.
Sincerely,
Edwin K
Reacting quickly to a mistake like this is crucial. My sales manager made a poor judgement call and made a decision to ask the customer to bear the brunt of his mistake. It was a small amount of money to the dealership, but it was a very big deal for our customer. This afternoon, Edwin's mother took delivery of her new 2008 RAV4 Limited. We have also implemented a process change that will help us prevent something like this from occurring again.
Saturday, June 21, 2008
HOW TO COMMUNICATE BEST WITH YOUR CAR DEALER
As many of you know, I communicate directly with my customers. Some would say to a fault. I don’t have a secretary or administrative assistant. My dealership’s telephone receptionist never asks the caller “who’s calling” or “may I ask the nature of your call?” and she puts my calls (and the calls to all my employees) right through. If I am not in my office, she puts them through automatically to my cell phone…7 days a week. I also have four red phones in four locations of my dealership…the showroom floor by the receptionist, the service customer waiting lounge, outdoors in the service drive, and in the body shop waiting lounge. Each phone has a picture of me with the message, “Customer Hotline To Earl Stewart. The Buck Stops Here. Have We Not Exceeded Your Expectations? Please Let Me Know. Simply Pick Up The Receiver And Wait For Me To Answer.” As if all this wasn’t enough, I put my home telephone number and cell phone number on my business cards and pass them out to my new customers at our bimonthly New Owners Dinner.
I say all this, not to brag (or maybe just a little). It might surprise you that I am not deluged with phone calls. I get quite a few, but considering I sell 400-500 cars a month and service thousands of cars each month, I doubt if I average more that 25 calls per day. Most of them are positive, complimentary calls. I believe one reason for this is that my employees are motivated to work harder to satisfy my customers because they know, if they don’t, I’m going to hear about it very quickly. Another reason is that my customers are remarkably respectful of the fact that they can call me and do not take advantage of it. Frankly, my wife, Nancy, was very nervous about this when I first started passing out my business card with my home telephone number. Would you believe that I don’t get more than 5 or 6 home calls a week? When you extend your trust to people, they almost always respect that and do not take advantage.
Of course, you are not going to find a lot of car dealers who do what I do. But here is how you can improve your communications in other ways that will allow you to get problems solved and promises kept. Always ask for the business card of every person you deal with. If they don’t have a card, be sure to get their name. This improves your service right away because the person is no longer anonymous. Ask the person for his cell phone number. There was a time when it was considered wrong to call someone on his cell phone, but that was before cell phone rates became so cheap and the cell phone became universal. If this is a critical person you are dealing with, ask for his home telephone number too. Here is a little trick that I use when I do this. I always start out by giving them my cell phone and my home phone number. Then I say “and may I have yours?” I can’t remember ever having been refused. If someone you are doing business with refuses to give you his cell or home phone number, maybe you should wonder why.
Also, make it a point to be introduced to this person’s manager. Get the manager’s business card and as many contact numbers as he is willing to share with you. When you do this, you have put the salesman or service advisor on notice that if he doesn’t return your phone calls you will be calling his boss. If you really want to have an edge, ask to meet the general manager and/or owner of the dealership. Get his telephone numbers. Now you will have everybody’s attention when you come into the dealership to transact business.
If you are a “computer person”, collect email addresses from everybody you deal with. Email is not as timely as a telephone, but it has the advantage over the telephone because it is “on the record”. When you make a request of a person by email, he can’t deny it because you have a copy of the message. I know that with Microsoft Outlook email, I get an acknowledgement every time somebody opens an email that I sent them. Furthermore you can copy as many people as you like with an email. You can send copies that the primary recipient knows about or make them blind copies that he can’t tell were sent. Someone is a lot more likely to act on your request when he knows that it is a matter of record and his boss was copied with the email.
If you can force yourself into the habit of getting names, telephone numbers, and email addresses from everybody you deal with and their managers, conducting business with your car dealer (or any other business) will be much smoother and trouble free.
I say all this, not to brag (or maybe just a little). It might surprise you that I am not deluged with phone calls. I get quite a few, but considering I sell 400-500 cars a month and service thousands of cars each month, I doubt if I average more that 25 calls per day. Most of them are positive, complimentary calls. I believe one reason for this is that my employees are motivated to work harder to satisfy my customers because they know, if they don’t, I’m going to hear about it very quickly. Another reason is that my customers are remarkably respectful of the fact that they can call me and do not take advantage of it. Frankly, my wife, Nancy, was very nervous about this when I first started passing out my business card with my home telephone number. Would you believe that I don’t get more than 5 or 6 home calls a week? When you extend your trust to people, they almost always respect that and do not take advantage.
Of course, you are not going to find a lot of car dealers who do what I do. But here is how you can improve your communications in other ways that will allow you to get problems solved and promises kept. Always ask for the business card of every person you deal with. If they don’t have a card, be sure to get their name. This improves your service right away because the person is no longer anonymous. Ask the person for his cell phone number. There was a time when it was considered wrong to call someone on his cell phone, but that was before cell phone rates became so cheap and the cell phone became universal. If this is a critical person you are dealing with, ask for his home telephone number too. Here is a little trick that I use when I do this. I always start out by giving them my cell phone and my home phone number. Then I say “and may I have yours?” I can’t remember ever having been refused. If someone you are doing business with refuses to give you his cell or home phone number, maybe you should wonder why.
Also, make it a point to be introduced to this person’s manager. Get the manager’s business card and as many contact numbers as he is willing to share with you. When you do this, you have put the salesman or service advisor on notice that if he doesn’t return your phone calls you will be calling his boss. If you really want to have an edge, ask to meet the general manager and/or owner of the dealership. Get his telephone numbers. Now you will have everybody’s attention when you come into the dealership to transact business.
If you are a “computer person”, collect email addresses from everybody you deal with. Email is not as timely as a telephone, but it has the advantage over the telephone because it is “on the record”. When you make a request of a person by email, he can’t deny it because you have a copy of the message. I know that with Microsoft Outlook email, I get an acknowledgement every time somebody opens an email that I sent them. Furthermore you can copy as many people as you like with an email. You can send copies that the primary recipient knows about or make them blind copies that he can’t tell were sent. Someone is a lot more likely to act on your request when he knows that it is a matter of record and his boss was copied with the email.
If you can force yourself into the habit of getting names, telephone numbers, and email addresses from everybody you deal with and their managers, conducting business with your car dealer (or any other business) will be much smoother and trouble free.
Saturday, May 31, 2008
SOMETIMES NICE GUYS DO WIN BALLGAMES
Leo Durocher is often quoted as saying “Nice guys don’t win ball games” [He later denied ever saying this]. But this expression is quoted often too justify aggressive, rude, exploitive and unethical business practices. A surprisingly large number of otherwise intelligent business leaders actually believe this saying. This is especially prevalent in the retail car business. I’m a member of an organization called a “20 Group”. This group of car dealers (about 20, hence the name) meets for 3 days 3 times a year to compare business practices and financial results. Our members are from all over the USA. The majority of the members of this group think my way of doing business is not smart. Most Florida dealers I know don’t understand or agree with my business practices.
This column is not a forum to celebrate my accomplishments or for trying to sell you a Toyota, but to share my knowledge with you about how to buy your next car or have your car serviced without being taken advantage of. With that said, I tell you that my Toyota dealership sold more new Toyotas last year than any other Toyota dealership between Orlando and Ft. Lauderdale. We are the currently ranked #50 out of more than 1,600 Toyota dealerships nationwide and we are #10 in the SE USA. Of course I’m proud of that accomplishment, 33 years in the making. After all, my dealership is in Lake Park, which many of you may not have even heard of. I always mention North Palm Beach in mentioning my dealership’s location because we are on the city limit of Lake Park and North Palm Beach. Our population in Lake Park in northern county is much less than that of West Palm Beach and Delray. We just aren’t “supposed to” sell more cars than the dealers from the “big city”.
Was it Will Rogers who said, “It ain’t braggin’ if it’s so”? I’m not sure if I agree with that and I always feel a little funny about tooting my own horn. The reason I’m writing about my dealership’s accomplishment is not because of what we did but how we did it. We were able to accomplish this truly amazing feat by being “nice guys” and we did win in spite of what Leo Durocher may have said. What most other car dealers can’t understand is how we can be so successful without advertising the way they do. By that I mean we virtually never advertise cars, prices, special sale events [Once last year we did advertise a sale on new Priuses because we temporarily had an oversupply]. If you have seen my ads, you know how I advertise. It’s all about my direct personal access via my red phone, my decrying the dealer fee and calling for it being made illegal, and telling you that you will always be treated with integrity, respect, and courtesy in my dealership.
Our sales practices and our service practices are like our advertising. We truly walk the talk. I have four red telephones located in the service drive, customer waiting lounge, show room, and the body shop. Beside the red phone is a sign with my picture saying, “The buck stops here. If we have not exceeded your expectations, pick up this red phone and be directly connected to me, the owner”. These red phones immediately ring my cell phone which I have with me 24/7 [I turn it off when I go to sleep at night]. I invite all of my new customers to a reception every two months, speak to them, and give each one my business card with my home telephone number. We don’t have secretaries in my company and we don’t have voice mails. No employee, including me, has their calls screened. In fact, if the person you are calling is out of the dealership, the call is directly connected to her cell phone. My instruction to all of my employees is “If the customer thinks she is right, take care of the problem”. The important thing about this philosophy is not debating who is right. The important thing is what our customer believes. Our motto is “It’s what you do for your customer when you don’t have to that is the true measure of character…like sticking up for somebody that can’t defend himself”.
There is another reason that I’m “bragging” in this column. Other businesses and especially other car dealers are sitting up and taking notice. Hopefully we will see some of them change their business practices like dropping the dealer fee and changing their bait and switch advertising tactics. If you’re a car dealer reading this column, give me a call and let’s talk. I want to tell you how much better you will do by treating your customers the way your mother probably told you you should. Not only will your business do better but you will sleep a lot better at night.
This column is not a forum to celebrate my accomplishments or for trying to sell you a Toyota, but to share my knowledge with you about how to buy your next car or have your car serviced without being taken advantage of. With that said, I tell you that my Toyota dealership sold more new Toyotas last year than any other Toyota dealership between Orlando and Ft. Lauderdale. We are the currently ranked #50 out of more than 1,600 Toyota dealerships nationwide and we are #10 in the SE USA. Of course I’m proud of that accomplishment, 33 years in the making. After all, my dealership is in Lake Park, which many of you may not have even heard of. I always mention North Palm Beach in mentioning my dealership’s location because we are on the city limit of Lake Park and North Palm Beach. Our population in Lake Park in northern county is much less than that of West Palm Beach and Delray. We just aren’t “supposed to” sell more cars than the dealers from the “big city”.
Was it Will Rogers who said, “It ain’t braggin’ if it’s so”? I’m not sure if I agree with that and I always feel a little funny about tooting my own horn. The reason I’m writing about my dealership’s accomplishment is not because of what we did but how we did it. We were able to accomplish this truly amazing feat by being “nice guys” and we did win in spite of what Leo Durocher may have said. What most other car dealers can’t understand is how we can be so successful without advertising the way they do. By that I mean we virtually never advertise cars, prices, special sale events [Once last year we did advertise a sale on new Priuses because we temporarily had an oversupply]. If you have seen my ads, you know how I advertise. It’s all about my direct personal access via my red phone, my decrying the dealer fee and calling for it being made illegal, and telling you that you will always be treated with integrity, respect, and courtesy in my dealership.
Our sales practices and our service practices are like our advertising. We truly walk the talk. I have four red telephones located in the service drive, customer waiting lounge, show room, and the body shop. Beside the red phone is a sign with my picture saying, “The buck stops here. If we have not exceeded your expectations, pick up this red phone and be directly connected to me, the owner”. These red phones immediately ring my cell phone which I have with me 24/7 [I turn it off when I go to sleep at night]. I invite all of my new customers to a reception every two months, speak to them, and give each one my business card with my home telephone number. We don’t have secretaries in my company and we don’t have voice mails. No employee, including me, has their calls screened. In fact, if the person you are calling is out of the dealership, the call is directly connected to her cell phone. My instruction to all of my employees is “If the customer thinks she is right, take care of the problem”. The important thing about this philosophy is not debating who is right. The important thing is what our customer believes. Our motto is “It’s what you do for your customer when you don’t have to that is the true measure of character…like sticking up for somebody that can’t defend himself”.
There is another reason that I’m “bragging” in this column. Other businesses and especially other car dealers are sitting up and taking notice. Hopefully we will see some of them change their business practices like dropping the dealer fee and changing their bait and switch advertising tactics. If you’re a car dealer reading this column, give me a call and let’s talk. I want to tell you how much better you will do by treating your customers the way your mother probably told you you should. Not only will your business do better but you will sleep a lot better at night.
Saturday, May 24, 2008
STOP COMPLAINING ABOUT GAS PRICES
“God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and the wisdom to know the difference.” Whether you think our gas prices are soaring because of a conspiracy by the giant oil companies, speculators on Wall Street, OPEC, or plain old supply and demand, there’s not much you or I can do about it, other than vote for the candidates of our choice and pray. I thought it may be useful to suggest some things you can do about lowering your total cost of fuel even if you can’t lower gas and oil prices.
(1) Burn the lowest octane fuel you can in your car without causing a ping or a knock. Even if your car’s owner’s manual recommends high test, there’s a good chance you can drop down one or even two grades of octane and your engine will run just fine. There are a lot of factors that affect how your car runs on a particular grade of fuel like ambient temperature and ethanol content. You can even experiment by mixing octanes in your tank. Buying the lowest octane will save you several cents a gallon.
(2) Keep your tires inflated 2 or 3 pounds over the manufacturer’s recommendation and check their pressure at least once a month. You may get a little harder ride but you will improve your gas mileage by about 5%.
(3) Check the Internet for the lowest priced gas station in your neighborhood. My favorite Web site is http://gasprices.mapquest.com/. This site shows prices for all of the gas stations near your zip code from lowest to highest. It also shows a map with the location, name and address of the gas station. I just checked the prices from my zip code, 33403. The lowest price for regular was $3.84/gal for a Circle K on Military Trail and the highest was $4.25/gal for Sunoco in Palm Beach. That’s 41 cents per gallon difference! You can save $8.20 on a 20 gallon fill up!
(4) Drive slower. Do you remember how they lowered the speed limit on the turnpike during our last energy crunch to 55 mph? This was to save gasoline because you burn a lot more fuel at 70 mph than you do at 55.
(5) Learn how to drive your car for maximum fuel efficiency. It’s not uncommon for one of my customers to complain that they are not getting the gas mileage on their particular model Toyota that the EPA sticker on their car when they bought it says they should. We always check the mileage by having one of our technicians drive the car and measure the mileage. Usually the technician gets as good or getter gas mileage than the EPA mileage. This is simply because he is an expert at driving cars for maximum fuel efficiency. One of my technicians, Rick Kearney, tell our customers that the best thing they can do to improve their gas mileage is to “reach down and take the brick out of their shoe”. He suggests that you imagine there is an egg between your foot and the gas pedal. Anticipate stops and curves so that you don’t have to brake, but just take your foot off the gas pedal. For longer stops like waiting for a bridge to go up and down or a train to go by, turn off your engine.
(6) Check your wheel alignment and rotate and balance your tires every 6 months or 5,000 miles, which ever first occurs. The less friction between your tires and the road, the better your gas mileage will be. With all the potholes and road construction we have in South Florida, you can know your front end out of alignment without even realizing it. Just because you can’t notice a pull to one side doesn’t always mean your alignment is right. Misaligned wheels prevent your tires from rotating smoothly over the road surface. Rotating and balancing your tires assures even wear and smooth surface for your tires to roll on.
(7) Riding a bicycle and walking is good for your health. When was the last time you walked anywhere? When was the last time your road a bicycle? Here’s a great way to save gas and improve your health at the same time.
(8) Take the bus or the train. I always get angry when I see a Palm Tran bus on the road because there are usually very few people on board. I think I read that they average about 20% occupancy. That’s a huge waste of taxpayers’ money. South Floridians just prefer the convenience of their own cars, but for the sacrifice of a little convenience think of all the gas dollars you can save. Tri-Rail not only will save you lots of gas money but the aggravation of fighting the traffic on I-95 or the turnpike.
(9) If you decide to purchase a hybrid vehicle (or any fuel efficient model), be very careful not to fall victim to price gouging. Many car dealers take advantage of sky-high gas prices by charging a large premium over the MSRP of hybrids and fuel efficient vehicles. These "market value adjustments" amount to thousands of dollars and unfairly victimize consumers.
(1) Burn the lowest octane fuel you can in your car without causing a ping or a knock. Even if your car’s owner’s manual recommends high test, there’s a good chance you can drop down one or even two grades of octane and your engine will run just fine. There are a lot of factors that affect how your car runs on a particular grade of fuel like ambient temperature and ethanol content. You can even experiment by mixing octanes in your tank. Buying the lowest octane will save you several cents a gallon.
(2) Keep your tires inflated 2 or 3 pounds over the manufacturer’s recommendation and check their pressure at least once a month. You may get a little harder ride but you will improve your gas mileage by about 5%.
(3) Check the Internet for the lowest priced gas station in your neighborhood. My favorite Web site is http://gasprices.mapquest.com/. This site shows prices for all of the gas stations near your zip code from lowest to highest. It also shows a map with the location, name and address of the gas station. I just checked the prices from my zip code, 33403. The lowest price for regular was $3.84/gal for a Circle K on Military Trail and the highest was $4.25/gal for Sunoco in Palm Beach. That’s 41 cents per gallon difference! You can save $8.20 on a 20 gallon fill up!
(4) Drive slower. Do you remember how they lowered the speed limit on the turnpike during our last energy crunch to 55 mph? This was to save gasoline because you burn a lot more fuel at 70 mph than you do at 55.
(5) Learn how to drive your car for maximum fuel efficiency. It’s not uncommon for one of my customers to complain that they are not getting the gas mileage on their particular model Toyota that the EPA sticker on their car when they bought it says they should. We always check the mileage by having one of our technicians drive the car and measure the mileage. Usually the technician gets as good or getter gas mileage than the EPA mileage. This is simply because he is an expert at driving cars for maximum fuel efficiency. One of my technicians, Rick Kearney, tell our customers that the best thing they can do to improve their gas mileage is to “reach down and take the brick out of their shoe”. He suggests that you imagine there is an egg between your foot and the gas pedal. Anticipate stops and curves so that you don’t have to brake, but just take your foot off the gas pedal. For longer stops like waiting for a bridge to go up and down or a train to go by, turn off your engine.
(6) Check your wheel alignment and rotate and balance your tires every 6 months or 5,000 miles, which ever first occurs. The less friction between your tires and the road, the better your gas mileage will be. With all the potholes and road construction we have in South Florida, you can know your front end out of alignment without even realizing it. Just because you can’t notice a pull to one side doesn’t always mean your alignment is right. Misaligned wheels prevent your tires from rotating smoothly over the road surface. Rotating and balancing your tires assures even wear and smooth surface for your tires to roll on.
(7) Riding a bicycle and walking is good for your health. When was the last time you walked anywhere? When was the last time your road a bicycle? Here’s a great way to save gas and improve your health at the same time.
(8) Take the bus or the train. I always get angry when I see a Palm Tran bus on the road because there are usually very few people on board. I think I read that they average about 20% occupancy. That’s a huge waste of taxpayers’ money. South Floridians just prefer the convenience of their own cars, but for the sacrifice of a little convenience think of all the gas dollars you can save. Tri-Rail not only will save you lots of gas money but the aggravation of fighting the traffic on I-95 or the turnpike.
(9) If you decide to purchase a hybrid vehicle (or any fuel efficient model), be very careful not to fall victim to price gouging. Many car dealers take advantage of sky-high gas prices by charging a large premium over the MSRP of hybrids and fuel efficient vehicles. These "market value adjustments" amount to thousands of dollars and unfairly victimize consumers.
CAR LEASING BOOBY TRAPS
This is the third article I’ve written on leasing, but I felt it was time because car dealers are resorting more than ever before to leasing advertising. This is simply because it’s easier to offer a low monthly payment with a lease ad than with a purchase ad.
(1) You owe the bank or leasing company for damage beyond “normal wear and tear” and excess mileage. The danger here is because many people return their car to the dealership after the lease expires without getting signed, written verification of what damage exists on the car and what mileage is on the odometer. Return lease cars commonly sit on the car dealer’s lot for weeks or even months before the bank or leasing company gets around to picking the car up to send it through the auction. Anybody might be driving that lease car in the interim. It could be an employee of the dealership. A returned lease car with a full tank of gas can be a big temptation. In many dealerships the accounting for returned lease cars is very sloppy. Remember, the car does not below to the dealership, but to the bank or leasing company. The dealer doesn’t even have insurance on this car. The insurance may even still be in your name. A return lease car can easily be stolen and no one would even notice. I have heard many horror stories of customers who received bills from their leasing company weeks after returning their lease car for thousands of dollars in damage and excess mileage that they say they were not responsible for. Your only protection is to be sure that a representative of the dealership fills out, with you, a complete return lease inspection form which notes all damage, the estimated cost of repair and the mileage. As an extra precaution, I recommend taking pictures of your lease return car. Be sure that this is signed by the dealership representative and you get a copy.
(2) A lease ad with a large down payment and short term. Most lease ads you see on TV or read in the newspaper have a large down payment hidden in the fine print. A down payment of $4,000 is typical. Ironically one of the biggest reasons people lease cars is to avoid laying out more cash. Dealers do this because a cash down payment on a lease is “leveraged” compared to a down payment on a purchase. A $4,000 down payment on a lease will reduce the monthly payment much more than on a purchase. Also, watch out for shorter lease terms such as 24 months compared to 36 or 48 which are normal. Remember, when buying a car, your monthly payments are paying for the “whole car”. When leasing, you are only paying for a small part of the car…the time you use it. A 24 month lease requires less of a down payment to lower the monthly payment than a 36 month lease or 48 month lease. You can actually lease a car for “zero dollars per month” if you put up a large enough down payment. The banks call this a “one-pay lease”. All you are doing is making all of your lease payment up front and, to a lesser extent; this is what you’re doing when a dealer sneaks in a large lease down payment in the fine print.
(3) Low mileage allowance. Be sure you know exactly how many miles are allowed in your lease contract. By restricting the number of miles you are allowed, the dealer can quote a lower monthly payment. I’ve seen lease ads with as low as a 7,500 annual mileage allowance and a 25 cent per mile penalty. Most people drive a lot more miles than this. If you missed this in the fine print and are a fairly typical driver who puts 15,000 miles a year on your car, you would get a surprise bill from the leasing company of $5,625 at the end of a 36 month lease!
(4) The Lease Acquisition Fee and the Dealer Fee. If you thought you were going to avoid the infamous “license to steal”, the dealer fee, by leasing your car you are wrong. The dealer will also charge this sneaky fee on a lease [which goes by at least 22 names according to the Florida Senate Investigative Report]. Furthermore, the banks or leasing companies all charge their version of the dealer fee commonly referred to as the “Lease Acquisition Fee” or “Bank Fee”. It’s fairly common for the bank or leasing company to kick back half of this to the dealer. This charge averages about $800 or $900.
(5) The Lease Disposal Fee. It would almost be funny if it weren’t so deceptive. The bank is charging you an extra fee for leasing you the car and then hitting you again for taking the car back. They certainly incur a cost for doing the lease and for taking the lease back, but his is called business overhead expense and should be included in their price which is your lease payment. The motive behind all of this, of course, is the same motive behind the dealer fee…it allows the “illusion” of a lower price than you are actually paying.
(6) Higher Insurance Costs. Typically you are required by the bank or leasing company to carry more insurance on their lease car than you might normally buy if you purchased your car. Furthermore, the cost of the insurance is simply higher on lease cars. That may be because insurance companies know that people are not as careful driving a lease car [belonging to the bank] than they are their own car.
(7) Higher Credit Requirements. Another reason dealers advertise lease payments is that most of those who respond to the ad cannot qualify to lease a car and the dealer then tries to sell them the same car. Of course the payments are much higher, but the dealer accomplished his purpose…”he got you in the door”. If you have a Beacon score below 720, which most people do, you can forget about leasing that car for advertised payment. You may be able to lease it at a higher payment if you have a 680+ Beacon, but many people don’t and cannot lease a car at all.
(8) No Hybrid Tax Incentive. The IRS offered a tax incentive to buy a hybrid car. All hybrids except Toyota have those in effect now. Because Toyota sells so many hybrids, 80% of all hybrids, their tax incentives expired. If you lease a hybrid, the tax incentive does not go to you; it goes to the leasing company because they are the legal owner of the car.
(9) No Tax Advantage to Leasing. This is not really a “booby trap” but a lot of people lease cars thinking they can write of the lease payment faster than they can depreciate a car if they buy it. This is not so. Check with your accountant.
The only real advantage I see to leasing over buying is protecting yourself against, or even taking advantage of, unexpected depreciation of the vehicle. When a bank or leasing company establishes a lease payment for a particular model car, the single biggest variable is what that car is going to be worth at the end of the lease. They can’t know and they have to guess. If they guess high and the car is worth a lot less at the end of the lease, you have no obligation and the bank suffers a big loss when they sell it at the auction. This happens more often than you might think. If you had bought the car, you would be the one to worry about the expectedly low trade-in value when you bought your next car. On the other hand if the bank guesses that the value of your lease car is lower than what the market value really is, you have an option to purchase that car at this low price. Even if you don’t want to keep the car, you can buy the car at this below market option price, sell it to the dealer for the true higher value, and pocket the difference.
(1) You owe the bank or leasing company for damage beyond “normal wear and tear” and excess mileage. The danger here is because many people return their car to the dealership after the lease expires without getting signed, written verification of what damage exists on the car and what mileage is on the odometer. Return lease cars commonly sit on the car dealer’s lot for weeks or even months before the bank or leasing company gets around to picking the car up to send it through the auction. Anybody might be driving that lease car in the interim. It could be an employee of the dealership. A returned lease car with a full tank of gas can be a big temptation. In many dealerships the accounting for returned lease cars is very sloppy. Remember, the car does not below to the dealership, but to the bank or leasing company. The dealer doesn’t even have insurance on this car. The insurance may even still be in your name. A return lease car can easily be stolen and no one would even notice. I have heard many horror stories of customers who received bills from their leasing company weeks after returning their lease car for thousands of dollars in damage and excess mileage that they say they were not responsible for. Your only protection is to be sure that a representative of the dealership fills out, with you, a complete return lease inspection form which notes all damage, the estimated cost of repair and the mileage. As an extra precaution, I recommend taking pictures of your lease return car. Be sure that this is signed by the dealership representative and you get a copy.
(2) A lease ad with a large down payment and short term. Most lease ads you see on TV or read in the newspaper have a large down payment hidden in the fine print. A down payment of $4,000 is typical. Ironically one of the biggest reasons people lease cars is to avoid laying out more cash. Dealers do this because a cash down payment on a lease is “leveraged” compared to a down payment on a purchase. A $4,000 down payment on a lease will reduce the monthly payment much more than on a purchase. Also, watch out for shorter lease terms such as 24 months compared to 36 or 48 which are normal. Remember, when buying a car, your monthly payments are paying for the “whole car”. When leasing, you are only paying for a small part of the car…the time you use it. A 24 month lease requires less of a down payment to lower the monthly payment than a 36 month lease or 48 month lease. You can actually lease a car for “zero dollars per month” if you put up a large enough down payment. The banks call this a “one-pay lease”. All you are doing is making all of your lease payment up front and, to a lesser extent; this is what you’re doing when a dealer sneaks in a large lease down payment in the fine print.
(3) Low mileage allowance. Be sure you know exactly how many miles are allowed in your lease contract. By restricting the number of miles you are allowed, the dealer can quote a lower monthly payment. I’ve seen lease ads with as low as a 7,500 annual mileage allowance and a 25 cent per mile penalty. Most people drive a lot more miles than this. If you missed this in the fine print and are a fairly typical driver who puts 15,000 miles a year on your car, you would get a surprise bill from the leasing company of $5,625 at the end of a 36 month lease!
(4) The Lease Acquisition Fee and the Dealer Fee. If you thought you were going to avoid the infamous “license to steal”, the dealer fee, by leasing your car you are wrong. The dealer will also charge this sneaky fee on a lease [which goes by at least 22 names according to the Florida Senate Investigative Report]. Furthermore, the banks or leasing companies all charge their version of the dealer fee commonly referred to as the “Lease Acquisition Fee” or “Bank Fee”. It’s fairly common for the bank or leasing company to kick back half of this to the dealer. This charge averages about $800 or $900.
(5) The Lease Disposal Fee. It would almost be funny if it weren’t so deceptive. The bank is charging you an extra fee for leasing you the car and then hitting you again for taking the car back. They certainly incur a cost for doing the lease and for taking the lease back, but his is called business overhead expense and should be included in their price which is your lease payment. The motive behind all of this, of course, is the same motive behind the dealer fee…it allows the “illusion” of a lower price than you are actually paying.
(6) Higher Insurance Costs. Typically you are required by the bank or leasing company to carry more insurance on their lease car than you might normally buy if you purchased your car. Furthermore, the cost of the insurance is simply higher on lease cars. That may be because insurance companies know that people are not as careful driving a lease car [belonging to the bank] than they are their own car.
(7) Higher Credit Requirements. Another reason dealers advertise lease payments is that most of those who respond to the ad cannot qualify to lease a car and the dealer then tries to sell them the same car. Of course the payments are much higher, but the dealer accomplished his purpose…”he got you in the door”. If you have a Beacon score below 720, which most people do, you can forget about leasing that car for advertised payment. You may be able to lease it at a higher payment if you have a 680+ Beacon, but many people don’t and cannot lease a car at all.
(8) No Hybrid Tax Incentive. The IRS offered a tax incentive to buy a hybrid car. All hybrids except Toyota have those in effect now. Because Toyota sells so many hybrids, 80% of all hybrids, their tax incentives expired. If you lease a hybrid, the tax incentive does not go to you; it goes to the leasing company because they are the legal owner of the car.
(9) No Tax Advantage to Leasing. This is not really a “booby trap” but a lot of people lease cars thinking they can write of the lease payment faster than they can depreciate a car if they buy it. This is not so. Check with your accountant.
The only real advantage I see to leasing over buying is protecting yourself against, or even taking advantage of, unexpected depreciation of the vehicle. When a bank or leasing company establishes a lease payment for a particular model car, the single biggest variable is what that car is going to be worth at the end of the lease. They can’t know and they have to guess. If they guess high and the car is worth a lot less at the end of the lease, you have no obligation and the bank suffers a big loss when they sell it at the auction. This happens more often than you might think. If you had bought the car, you would be the one to worry about the expectedly low trade-in value when you bought your next car. On the other hand if the bank guesses that the value of your lease car is lower than what the market value really is, you have an option to purchase that car at this low price. Even if you don’t want to keep the car, you can buy the car at this below market option price, sell it to the dealer for the true higher value, and pocket the difference.
Monday, April 28, 2008
WHAT MAKES A CAR SALESMAN TICK
A car salesman calling himself “Alex S” posted a comment on my Blog recently. You can read his comment and my response by clicking on my Blog, http://www.earlstewartoncars.com/ and going to my article, “The No-Dealer-Fee “Fat Lady” Hasn’t Sung Yet.”
I’ve reproduced his posting and my reply below because the comments of this car salesman are very revealing of what goes on inside the heads of many car sales people today.
I often am accused of calling car dealers and car sales people “crooks” or just plain “evil”. I certainly don’t mean to. I don’t believe that most people in the retail auto business are dishonest any more than I believe that about lawyers or politicians. Of course, there are a few that are just plain bad.
“Amoral” is a better way to describe the mindset of those in the retail car business who cause the huge problem we have today with the way car buyers are treated. A person who is amoral is one who is not admitting of moral distinctions or judgments; neither moral nor immoral. When you read the words of “Alex S” below you can see that he does not believe what he does to sell a car is deceptive, immoral or unethical. I’m sure you know others like Alex. If somebody challenges their behavior, it’s never their fault. In Alex’s case, he blames me and he blames and his customers for the negativity surrounding car dealers and car salesmen.
(my comments in caps)
Earl Stewart:THANKS VERY MUCH FOR YOUR POSTING. PLEASE EXCUSE THE "ALL CAPS" BUT THIS WILL DIFFERENTIATE YOUR WORDS FROM MINE. I'VE CHOSEN TO ADDRESS YOUR POSTING PARAGRAPH BY PARAGRAPH. FIRST, LET ME CONGRATULATE YOU FOR HAVING THE COURAGE, NOT ONLY TO RESPOND TO MY BLOG, BUT NOT TO CHOOSE TO BE ANONYMOUS. YOUR POSTING IS VERY INTERESTING BECAUSE IT SPEAKS FOR MOST FLORIDA CAR DEALERS. AS YOU POINT OUT, YOU AND MOST OF THOSE EMPLOYED IN THE RETAIL AUTO BUSINESS ARE NOT "CROOKS". A MINORITY ARE, BUT THE MAJORITY ARE SIMPLY ASSESSING THE DEALER FEE BECAUSE "THAT'S THE WAY ITS ALWAYS BEEN DONE" AND NOT TAKING TIME TO THINK OUT WHY IT'S BAD FOR THE CONSUMER.
Alex S: I work at a dealership in sawgrass(i wont mention the name because i dont have the authority to). Over the past few days I have noticed the quantity of my complaints over dealer fees have gone up, so I investigated and found your site. I respect what you are doing and can completely understand what it is that you are doing. I always disclose the dealer fees to my clients during me negotiations, i don't say plus fees i tell them plus dealer fees of XXX.
Earl Stewart: I'M VERY GLAD TO HEAR THAT MY ANTI-DEALER FEE EFFORTS ARE SPREADING AROUND THE STATE. I'M HAPPY TO HEAR THAT YOU TOTALLY DISCLOSE THE DEALER FEE TO ALL OF YOUR CUSTOMERS. UNFORTUNATELY, MOST SALES PEOPLE DO NOT. VIRTUALLY ALL SALES PEOPLE DO NOT USE THE COMPLETE TERM "DEALER FEE" [OR WHATEVER THEIR PARTICULAR DEALERSHIP CHOOSES TO CALL IT], BUT SIMPLY SAY "FEES". THIS LEADS THE CUSTOMER TO BELIEVE IT IS AN "OFFICAL FEE", FEDERAL, STATE, OR LOCAL.
Alex S: What it boils down to for me is that "profit" is not a dirty word. Dealer fees are an essential part of profit. Car sales are all a game, the customers goal is to spend as little as possible where as my goal is to make as much as possible. If both parties can come to a happy agreement, then it is all for the better. I read your previous article and people feel they are being robbed, that is simply not the point, No salesman has ever held a customer down and made them sign, if you dont like the way we do business then leave.
Earl Stewart: I CAN'T TELL YOU HOW OFTEN I'VE HEARD OTHER DEALERS USE THE SAME PHRASE, "PROFIT IS NOT A DIRTY WORD". THIS PHRASE IS A STRAW DOG JUST LIKE "WE DON'T WANT GOVERNMENT TO TELL US HOW TO PRICE OUR CARS". MY DEALERSHIP IS VERY PROFITABLE AND I DON'T CHARGE DEALER FEES. I'M IN BUSINESS TO MAKE A PROFIT AND I WOULDN'T BE IF I THOUGHT "PROFIT WAS A DIRTY WORD". I'M NOT CRAZY ABOUT YOUR DESCRIPTION OF "ALL CAR SALES BEING A GAME". IT'S THE 2ND BIGGEST PURCHASE A CUSTOMER MAKES IN HIS LIFE. IF IT'S A GAME, IT'S A VERY SERIOUS AND IMPORTANT ONE. USING YOUR ANALOGY, I ONLY WANT BOTH TEAMS TO BE FULLY INFORMED OF THE RULES OF THE GAME...HENCE FULL DISCLOSURE OF THE PRICE OF THE CAR WHICH SHOULD INCLUDE EVERYTHING EXCEPT TAX AND TAG. THIS FULL DISCLOSURE SHOULD NOT COME "AFTER THE FACT" BUT FROM THE FIRST TIME A PRICE IS QUOTED IN ADVERTISING, VERBALLY, ON A WINDSHIELD OR SIGN, OR OVER THE INTERNET. YOU SAY "NO ONE HAS EVER HELD A CUSTOMER DOWN AND MADE HIM SIGN". MAYBE NOT LITERALLY, BUT I KNOW OF LOTS OF CUSTOMERS THAT WERE FIGURATIVELY "HELD DOWN". I'VE TALKED WITH ELDERLY WIDOWS IN THEIR EIGHTIES AND NINTIES WHO WERE KEPT IN A CLOSING OFFICE FOR HOURS WHEN THEY ASKED FOR THEIR CAR KEYS TO GO HOME. I ALSO KNOW OF CUSTOMERS WHO DON'T UNDERSTAND OR READ ENGLISH WELL, YOUNG, UNSOPHISTICATED FIRST-TIME BUYERS, AND BUYERS WHO ARE UNEDUCATED AND/OR JUST NOT VERY SMART WHO HAVE BEEN TAKE GREAT ADVANTAGE OF.
Alex S: People do not walk into an electronics store and fight about the price they pay for a $5000 flat screen tv. They dont walk into the grocery store and argue about the price of a pound of apples. I guess what i am trying to get at is if you are in a comfortable place with a calm attitude the dealer fee should not be a deal breaker for anyone. Talk to the dealer sales associate about it. Believe me when i say this, most sales people dont recieve compensation from the dealer fee, but i still need to collect it.
Earl Stewart: ANOTHER THING THAT DOESN'T HAPPEN WHEN YOU SHOP CIRCUIT CITY, BUY RITE, AND BEST BUY TO GET THE LOWEST PRICE ON A 50 INCH PANASONIC TV IS NOT BEING SURPRISED AT THE CASHIER THAT THE "BEST PRICE" IS NOT REALLY THE BESTS PRICE BECAUSE BEST BUY HAS A $350 "DEALER FEE". YOU DON'T HAVE TO HAGGLE WITH CIRCUIT CITY BECAUSE YOU'VE HAD THE OPPORTUNITY TO FAIRLY COMPARE THEIR PRICE WITH THEIR COMPETITION. THIS OPPORTUNITY IS BEING DENIED CAR BUYERS IN FLORIDA. YOU ARE RIGHT ABOUT CAR SALESMEN NOT BEING PAID ON THE DEALER FEE. THIS MAKES THE SALESMAN VERY RELUCTANT TO DEDUCT THE AMOUNT OF THE DEALER FEE FROM THE PRICE OF THE CAR DURING NEGOTIATION. IF YOUR DEALER FEE IS $999 AND YOU DEDUCT IT FROM THE PRICE, YOU ARE COSTING YOURSELF $250 [ASSUMING A 25% COMMISSION]. THE SALESMAN ALSO TELLS THE CUSTOMER HE CANNOT REMOVE THE DEALER FEE BECAUSE HE IS REQUIRED BY LAW TO CHARGE ALL CUSTOMERS THE SAME DEALER FEE.
Alex S: If you find the need to rush out after the sales associate has informed you of a dealer fee, you didnt want to be there in the first place. Buying a car should be a pleasent experience.
Earl Stewart: WOULDN'T YOU "RUSH OUT" OF BEST BUY IF THE CASHIER ADDED A $350 DEALER FEE TO THE $3,995 ADVERTISED PRICE OF YOUR PANASONIC PLASMA TV? AS FAR AS CAR BUYING BEING A PLEASANT EXPERIENCE, TRY THIS EXPERIMENT...WITHOUT REVEALING YOU ARE A CAR SALESMAN, ASK THE NEXT 10 PEOPLE YOU SEE OUTSIDE YOUR DEALERSHIP IF THEY CONSIDER BUYING A CAR A "PLEASANT EXPERIENCE". I WROTE A POSTING FOR THIS BLOG ENTITLED "WOULD YOU RATHER BUY A CAR OR HAVE A COLONOSCOPY"? CAR DEALERS ARE ONE OF THE FEW RETAILERS THAT HAVEN'T ENTERED THE 21ST CENTURY. THEY ARE GOING TO HAVE TO IF THEY ARE GOING TO SURVIVE AND COMPETE. ALex, IN THE 21ST CENTURY, "THE CUSTOMER IS KING"...WAKE UP AND SMELL THE COFFEE.
Alex S: As a last note, if you walk into a dealship expecting to be ripped off, no matter how good of deal you actually get, it will never be good enough. If you walk in expecting to be treated right, you will probably leave happy everytime.
Earl Stewart: ARE YOU SUGGESTING THAT CAR BUYERS SHOULD SHOULD NOT BE WARY OF OVER-PAYING WHEN BUYING A CAR? IN THE SECOND PARAGRAPH OF YOUR POSTING YOU ADMITTED THAT "YOUR GOAL WAS TO MAKE AS MUCH PROFT OFF THAT CUSTOMER AS POSSIBLE". YOU ARE SUGGESTING THAT IF THE CUSTOMERS WEAR ROSE TINTED GLASSES, TRUST YOU TO GIVE THEM A GOOD PRICE, THEY WILL LEAVE HAPPY. ALEX, THE ONLY CUSTOMERS THAT "LEAVES HAPPY EVERY TIME" AFTER OVER PAYING FOR A CAR ARE THE THOSE WHO WERE DECEIVED.
I’ve reproduced his posting and my reply below because the comments of this car salesman are very revealing of what goes on inside the heads of many car sales people today.
I often am accused of calling car dealers and car sales people “crooks” or just plain “evil”. I certainly don’t mean to. I don’t believe that most people in the retail auto business are dishonest any more than I believe that about lawyers or politicians. Of course, there are a few that are just plain bad.
“Amoral” is a better way to describe the mindset of those in the retail car business who cause the huge problem we have today with the way car buyers are treated. A person who is amoral is one who is not admitting of moral distinctions or judgments; neither moral nor immoral. When you read the words of “Alex S” below you can see that he does not believe what he does to sell a car is deceptive, immoral or unethical. I’m sure you know others like Alex. If somebody challenges their behavior, it’s never their fault. In Alex’s case, he blames me and he blames and his customers for the negativity surrounding car dealers and car salesmen.
(my comments in caps)
Earl Stewart:THANKS VERY MUCH FOR YOUR POSTING. PLEASE EXCUSE THE "ALL CAPS" BUT THIS WILL DIFFERENTIATE YOUR WORDS FROM MINE. I'VE CHOSEN TO ADDRESS YOUR POSTING PARAGRAPH BY PARAGRAPH. FIRST, LET ME CONGRATULATE YOU FOR HAVING THE COURAGE, NOT ONLY TO RESPOND TO MY BLOG, BUT NOT TO CHOOSE TO BE ANONYMOUS. YOUR POSTING IS VERY INTERESTING BECAUSE IT SPEAKS FOR MOST FLORIDA CAR DEALERS. AS YOU POINT OUT, YOU AND MOST OF THOSE EMPLOYED IN THE RETAIL AUTO BUSINESS ARE NOT "CROOKS". A MINORITY ARE, BUT THE MAJORITY ARE SIMPLY ASSESSING THE DEALER FEE BECAUSE "THAT'S THE WAY ITS ALWAYS BEEN DONE" AND NOT TAKING TIME TO THINK OUT WHY IT'S BAD FOR THE CONSUMER.
Alex S: I work at a dealership in sawgrass(i wont mention the name because i dont have the authority to). Over the past few days I have noticed the quantity of my complaints over dealer fees have gone up, so I investigated and found your site. I respect what you are doing and can completely understand what it is that you are doing. I always disclose the dealer fees to my clients during me negotiations, i don't say plus fees i tell them plus dealer fees of XXX.
Earl Stewart: I'M VERY GLAD TO HEAR THAT MY ANTI-DEALER FEE EFFORTS ARE SPREADING AROUND THE STATE. I'M HAPPY TO HEAR THAT YOU TOTALLY DISCLOSE THE DEALER FEE TO ALL OF YOUR CUSTOMERS. UNFORTUNATELY, MOST SALES PEOPLE DO NOT. VIRTUALLY ALL SALES PEOPLE DO NOT USE THE COMPLETE TERM "DEALER FEE" [OR WHATEVER THEIR PARTICULAR DEALERSHIP CHOOSES TO CALL IT], BUT SIMPLY SAY "FEES". THIS LEADS THE CUSTOMER TO BELIEVE IT IS AN "OFFICAL FEE", FEDERAL, STATE, OR LOCAL.
Alex S: What it boils down to for me is that "profit" is not a dirty word. Dealer fees are an essential part of profit. Car sales are all a game, the customers goal is to spend as little as possible where as my goal is to make as much as possible. If both parties can come to a happy agreement, then it is all for the better. I read your previous article and people feel they are being robbed, that is simply not the point, No salesman has ever held a customer down and made them sign, if you dont like the way we do business then leave.
Earl Stewart: I CAN'T TELL YOU HOW OFTEN I'VE HEARD OTHER DEALERS USE THE SAME PHRASE, "PROFIT IS NOT A DIRTY WORD". THIS PHRASE IS A STRAW DOG JUST LIKE "WE DON'T WANT GOVERNMENT TO TELL US HOW TO PRICE OUR CARS". MY DEALERSHIP IS VERY PROFITABLE AND I DON'T CHARGE DEALER FEES. I'M IN BUSINESS TO MAKE A PROFIT AND I WOULDN'T BE IF I THOUGHT "PROFIT WAS A DIRTY WORD". I'M NOT CRAZY ABOUT YOUR DESCRIPTION OF "ALL CAR SALES BEING A GAME". IT'S THE 2ND BIGGEST PURCHASE A CUSTOMER MAKES IN HIS LIFE. IF IT'S A GAME, IT'S A VERY SERIOUS AND IMPORTANT ONE. USING YOUR ANALOGY, I ONLY WANT BOTH TEAMS TO BE FULLY INFORMED OF THE RULES OF THE GAME...HENCE FULL DISCLOSURE OF THE PRICE OF THE CAR WHICH SHOULD INCLUDE EVERYTHING EXCEPT TAX AND TAG. THIS FULL DISCLOSURE SHOULD NOT COME "AFTER THE FACT" BUT FROM THE FIRST TIME A PRICE IS QUOTED IN ADVERTISING, VERBALLY, ON A WINDSHIELD OR SIGN, OR OVER THE INTERNET. YOU SAY "NO ONE HAS EVER HELD A CUSTOMER DOWN AND MADE HIM SIGN". MAYBE NOT LITERALLY, BUT I KNOW OF LOTS OF CUSTOMERS THAT WERE FIGURATIVELY "HELD DOWN". I'VE TALKED WITH ELDERLY WIDOWS IN THEIR EIGHTIES AND NINTIES WHO WERE KEPT IN A CLOSING OFFICE FOR HOURS WHEN THEY ASKED FOR THEIR CAR KEYS TO GO HOME. I ALSO KNOW OF CUSTOMERS WHO DON'T UNDERSTAND OR READ ENGLISH WELL, YOUNG, UNSOPHISTICATED FIRST-TIME BUYERS, AND BUYERS WHO ARE UNEDUCATED AND/OR JUST NOT VERY SMART WHO HAVE BEEN TAKE GREAT ADVANTAGE OF.
Alex S: People do not walk into an electronics store and fight about the price they pay for a $5000 flat screen tv. They dont walk into the grocery store and argue about the price of a pound of apples. I guess what i am trying to get at is if you are in a comfortable place with a calm attitude the dealer fee should not be a deal breaker for anyone. Talk to the dealer sales associate about it. Believe me when i say this, most sales people dont recieve compensation from the dealer fee, but i still need to collect it.
Earl Stewart: ANOTHER THING THAT DOESN'T HAPPEN WHEN YOU SHOP CIRCUIT CITY, BUY RITE, AND BEST BUY TO GET THE LOWEST PRICE ON A 50 INCH PANASONIC TV IS NOT BEING SURPRISED AT THE CASHIER THAT THE "BEST PRICE" IS NOT REALLY THE BESTS PRICE BECAUSE BEST BUY HAS A $350 "DEALER FEE". YOU DON'T HAVE TO HAGGLE WITH CIRCUIT CITY BECAUSE YOU'VE HAD THE OPPORTUNITY TO FAIRLY COMPARE THEIR PRICE WITH THEIR COMPETITION. THIS OPPORTUNITY IS BEING DENIED CAR BUYERS IN FLORIDA. YOU ARE RIGHT ABOUT CAR SALESMEN NOT BEING PAID ON THE DEALER FEE. THIS MAKES THE SALESMAN VERY RELUCTANT TO DEDUCT THE AMOUNT OF THE DEALER FEE FROM THE PRICE OF THE CAR DURING NEGOTIATION. IF YOUR DEALER FEE IS $999 AND YOU DEDUCT IT FROM THE PRICE, YOU ARE COSTING YOURSELF $250 [ASSUMING A 25% COMMISSION]. THE SALESMAN ALSO TELLS THE CUSTOMER HE CANNOT REMOVE THE DEALER FEE BECAUSE HE IS REQUIRED BY LAW TO CHARGE ALL CUSTOMERS THE SAME DEALER FEE.
Alex S: If you find the need to rush out after the sales associate has informed you of a dealer fee, you didnt want to be there in the first place. Buying a car should be a pleasent experience.
Earl Stewart: WOULDN'T YOU "RUSH OUT" OF BEST BUY IF THE CASHIER ADDED A $350 DEALER FEE TO THE $3,995 ADVERTISED PRICE OF YOUR PANASONIC PLASMA TV? AS FAR AS CAR BUYING BEING A PLEASANT EXPERIENCE, TRY THIS EXPERIMENT...WITHOUT REVEALING YOU ARE A CAR SALESMAN, ASK THE NEXT 10 PEOPLE YOU SEE OUTSIDE YOUR DEALERSHIP IF THEY CONSIDER BUYING A CAR A "PLEASANT EXPERIENCE". I WROTE A POSTING FOR THIS BLOG ENTITLED "WOULD YOU RATHER BUY A CAR OR HAVE A COLONOSCOPY"? CAR DEALERS ARE ONE OF THE FEW RETAILERS THAT HAVEN'T ENTERED THE 21ST CENTURY. THEY ARE GOING TO HAVE TO IF THEY ARE GOING TO SURVIVE AND COMPETE. ALex, IN THE 21ST CENTURY, "THE CUSTOMER IS KING"...WAKE UP AND SMELL THE COFFEE.
Alex S: As a last note, if you walk into a dealship expecting to be ripped off, no matter how good of deal you actually get, it will never be good enough. If you walk in expecting to be treated right, you will probably leave happy everytime.
Earl Stewart: ARE YOU SUGGESTING THAT CAR BUYERS SHOULD SHOULD NOT BE WARY OF OVER-PAYING WHEN BUYING A CAR? IN THE SECOND PARAGRAPH OF YOUR POSTING YOU ADMITTED THAT "YOUR GOAL WAS TO MAKE AS MUCH PROFT OFF THAT CUSTOMER AS POSSIBLE". YOU ARE SUGGESTING THAT IF THE CUSTOMERS WEAR ROSE TINTED GLASSES, TRUST YOU TO GIVE THEM A GOOD PRICE, THEY WILL LEAVE HAPPY. ALEX, THE ONLY CUSTOMERS THAT "LEAVES HAPPY EVERY TIME" AFTER OVER PAYING FOR A CAR ARE THE THOSE WHO WERE DECEIVED.
Monday, April 14, 2008
TOP 10 WAYS TO GET SHAFTED BY A CAR DEALER
(1) Believe the newspaper and TV ads. It never ceases to amaze me how outrageous and unbelievable the car dealers’ claims are. Just when I think that they can’t get any worse, I see one that tops them all. Last month, one dealer was advertising in the newspaper and TV that if you bought one vehicle from him you got a second for nothing. The “facts and fine print” would reveal that the first vehicle was a very expensive one with a huge markup of over $6,000 and the second vehicle was only the “use” of one for two years... a lease. My father always said, “If it sounds too good to be true, it probably isn’t”. Astoundingly, the general manager of this dealership had the gall to say on TV, “This is not a gimmick”!
(2) Buy a car on impulse on the first day you start shopping. Can you believe that this is the way most people buy cars? It truly is. There is something about a new car that excites people and appeals to them on an emotional level. People let their feelings short circuit their logical thought processes. Overcome that emotion that tells you that you must drive home that shiny new car right now. Go home and think about it. Talk it over with your spouse and friends. Research the model of car you looked at and the price on the Internet. Always drive the car you chose before you sign any papers. You should take at least a week or two in the decision making process before you buy a car.
(3) Trade your old car in to the dealer you buy from without shopping its value. Most people have no idea what their trade-in is worth when they come in to buy a new car. They rely entirely on the appraisal by the selling dealer. The dealer can make it appear that he is giving you a lot of money for your trade by taking some of the high markup on the new car and showing it as part of the appraisal value. Check Kelly Blue Book (kbb.com) and Edumnds.com on the Internet. Get at least 3 bids from other dealers of the same make for your trade. Make the purchase of the new car and the sale of your trade two separate transactions. Remember that you do get a sales tax break by trading in your car to the dealer you buy from.
(4) Use the dealer’s financing without checking with your bank or credit union. Shop for the best price on your financing just like you shop for the best price on your trade-in and the best price on new your car.
(5) Believe this, “This low price is good today only”. This is one of the favorite ruses used by car sales people and dealers. In 99% of the cases, you can buy that car for the same or an even lower price later. The only time that you can’t is when factory incentives expire on a certain date, typically at the end of the month. If that is the claim, demand to see the written factory incentive by the manufacturer.
(6) Fall for this, “Make me a written offer with a deposit and I will submit it to my manager”. This is S.O.P at most car dealerships. This is to get you psychologically engaged in the buying process. Once you have signed a buyer’s order and written out a check, you will remain in the dealership for a while and are more likely to buy. The salesman knows that. Insist on getting their best price on the car you have selected. You should never make the first offer. Once you have their price, compare it with at least 3 other prices from other dealers on the same make and model.
(7) Follow this advice, “Take this new car home and see how you like it.” This is the famous “puppy dog” technique so named because once you take a puppy dog home overnight, who has the heart to return it the next day? You, your neighbors, and friends will see that shiny new car parked in your driveway. It sure looks good! How can you explain to anybody that you didn’t buy it?
(8) Agree to this, “I’ll buy the car if you can get my monthly payments below $___.__” Most of us tend to think in terms of our monthly budgets. We might feel that we can afford a new car as long as it costs us less than $350 per month, but there is a big difference between $350 per month for 36 months and $350 per month for 72 months. I recommend that you finance a car for no more than 42 months, preferably 36.
(9) Believe the salesman when he says, “You have my word on that.” Be absolutely sure that every promise or commitment made to you by your sales person is in writing and signed by a manager. That salesman may not work there when you have occasion to ask for that “free loaner car” that he promised you anytime you bring your car in for service.
(10) Fall for this, “All dealers charge a dealer fee and we can’t remove it from the invoice.” In fact, all dealers do not charge a dealer fee. I don’t. But unfortunately most do charge this “gotcha” ranging from $495 to $1,000. It is true that Florida law (which should prohibit dealer fees entirely) requires that the dealer fee appear on all invoices. If you charge just one customer a dealer fee, you must charge everybody. The state legislators, in their infinite wisdom, decided if a car dealer is going to take advantage of even one buyer, he must take advantage of all of the buyers….never discriminate. But the loophole in this stupid law is for you to demand that the dealer reduce the price of the car by the amount of the dealer fee, making it a wash.
(2) Buy a car on impulse on the first day you start shopping. Can you believe that this is the way most people buy cars? It truly is. There is something about a new car that excites people and appeals to them on an emotional level. People let their feelings short circuit their logical thought processes. Overcome that emotion that tells you that you must drive home that shiny new car right now. Go home and think about it. Talk it over with your spouse and friends. Research the model of car you looked at and the price on the Internet. Always drive the car you chose before you sign any papers. You should take at least a week or two in the decision making process before you buy a car.
(3) Trade your old car in to the dealer you buy from without shopping its value. Most people have no idea what their trade-in is worth when they come in to buy a new car. They rely entirely on the appraisal by the selling dealer. The dealer can make it appear that he is giving you a lot of money for your trade by taking some of the high markup on the new car and showing it as part of the appraisal value. Check Kelly Blue Book (kbb.com) and Edumnds.com on the Internet. Get at least 3 bids from other dealers of the same make for your trade. Make the purchase of the new car and the sale of your trade two separate transactions. Remember that you do get a sales tax break by trading in your car to the dealer you buy from.
(4) Use the dealer’s financing without checking with your bank or credit union. Shop for the best price on your financing just like you shop for the best price on your trade-in and the best price on new your car.
(5) Believe this, “This low price is good today only”. This is one of the favorite ruses used by car sales people and dealers. In 99% of the cases, you can buy that car for the same or an even lower price later. The only time that you can’t is when factory incentives expire on a certain date, typically at the end of the month. If that is the claim, demand to see the written factory incentive by the manufacturer.
(6) Fall for this, “Make me a written offer with a deposit and I will submit it to my manager”. This is S.O.P at most car dealerships. This is to get you psychologically engaged in the buying process. Once you have signed a buyer’s order and written out a check, you will remain in the dealership for a while and are more likely to buy. The salesman knows that. Insist on getting their best price on the car you have selected. You should never make the first offer. Once you have their price, compare it with at least 3 other prices from other dealers on the same make and model.
(7) Follow this advice, “Take this new car home and see how you like it.” This is the famous “puppy dog” technique so named because once you take a puppy dog home overnight, who has the heart to return it the next day? You, your neighbors, and friends will see that shiny new car parked in your driveway. It sure looks good! How can you explain to anybody that you didn’t buy it?
(8) Agree to this, “I’ll buy the car if you can get my monthly payments below $___.__” Most of us tend to think in terms of our monthly budgets. We might feel that we can afford a new car as long as it costs us less than $350 per month, but there is a big difference between $350 per month for 36 months and $350 per month for 72 months. I recommend that you finance a car for no more than 42 months, preferably 36.
(9) Believe the salesman when he says, “You have my word on that.” Be absolutely sure that every promise or commitment made to you by your sales person is in writing and signed by a manager. That salesman may not work there when you have occasion to ask for that “free loaner car” that he promised you anytime you bring your car in for service.
(10) Fall for this, “All dealers charge a dealer fee and we can’t remove it from the invoice.” In fact, all dealers do not charge a dealer fee. I don’t. But unfortunately most do charge this “gotcha” ranging from $495 to $1,000. It is true that Florida law (which should prohibit dealer fees entirely) requires that the dealer fee appear on all invoices. If you charge just one customer a dealer fee, you must charge everybody. The state legislators, in their infinite wisdom, decided if a car dealer is going to take advantage of even one buyer, he must take advantage of all of the buyers….never discriminate. But the loophole in this stupid law is for you to demand that the dealer reduce the price of the car by the amount of the dealer fee, making it a wash.
Saturday, April 05, 2008
The No-Dealer-Fee “Fat Lady” Hasn’t Sung Yet
My last column, “The Dealer Fee, Bestiality, and Politics” voiced my concern for the success of our efforts to end or better regulate the car dealers’ license to steal, the infamous Dealer Fee. What a difference a day (or two) makes!
On March 25th Daniel Vasquez, consumer reporter for the Ft. Lauderdale Sun Sentinel, wrote a great column about the Dealer Fee and its unfairness to the car buyer. You can read this column by clicking on www.SunSentinel.com and then enter “Daniel Vasquez” in search, and then “Little-understood fees can add to a new car's bottom line.” There was a huge, supportive email response to this column. Mr. Vasquez listed the email addresses and phone numbers for Senator Alex Diaz de la Portilla, the chairman of the Senate Commerce committee [Contact Senate Commerce Committee Chair Alex Diaz de la Portilla at: portilla.alex.web@flsenate.govor call 850-487-5109 or 305-643-7200.]
On Thursday afternoon, April 3, I was driving my wife, Nancy, to Tampa for some minor surgery on her foot. Just before we arrived I received a call on my cell phone from Patricia Gosney, Senator Diaz de la Portilla’s assistant in Tallahassee. She told me that “somebody had showed the Senator a copy of my article” and she and the Senator were concerned because I had said that I was unable to contact him”. She asked me why I had said that and I explained that I had left several email and voice mail messages for the Senator and he had not returned any of them. Patricia did acknowledge that the Senator does receive “thousands” of emails and that it’s impossible to read all of them [One wonders, since most politicians do get lots of email, why they don’t let it be known that there will be no response or simply see to it that all emails are responded to?]. Patricia also told me that she was sure that I had not called the Tallahassee office. To which I responded that I’d called the Miami office and left unreturned voice mails. She said that she would look into that but she knows nothing about the Miami office. We agreed that from now on I would call Patricia in Tallahassee and she was kind enough to give me her email address which she told me she always responds to.
I asked Patricia to apologize on my behalf to Senator Diaz de la Portilla for expressing doubt about his strong support because of the breakdown of communications between us. Some of my concern was because of a conversation that I had with Senator Ken Pruitt’s Tallahassee assistant, Ann, about a week ago. She told me she would try to get some information on the progress of the Senate bill from the staff of Senator Diaz de la Portilla and when she did not get back to me, I assumed there was no progress. Ann had told me, that because there was no House sponsor of a sister bill, there was no chance of ever getting a law passed this year. Fortunately we now know Ann was mistaken.
The good news is that Patricia assured me that Senator Alex Diaz de la Portilla is solidly behind passing some legislation to better regulate the dealer fee. There is no longer a SB 954, the original shell bill for the Dealer Fee. The Senator has modified an existing bill, SB 2150 to include Dealer Fee regulations. And the really good news is that there is also a simultaneous House bill on this subject, HB 827. If you read my last column, you will know that his was why I was so concerned that there is no way we could get a bill through the legislature this year. Now we have a better chance.
Later that same afternoon, Thursday, April 3, shortly after the call from Patricia, Senator Jeff Atwater called me to assure me of his unswerving support of the anti Dealer Fee legislation. I hadn’t spoken to Senator Atwater in a long time. He explained how busy all of the legislators are and I know how busy Jeff is. I see his commercials on TV all the time. I like the one where he stares sternly at the evil insurance company executives and tells them how he will not stand still for their inhumane treatment of Florida’s insured. In fact, it reminds me a little bit of my TV commercial against the Dealer Fee.
Here is the language that was added to the existing bill, SB 2150 as of Thursday, April 3:
(6) "Advertised price" means the price as expressed in any statements that are transmitted orally, through written material, or through electronic means, or any illustration that is disseminated to the public or affixed to a motor vehicle and that is used in selling a motor vehicle or otherwise used to induce a person to enter into any obligation related to the motor vehicle.
And (a) The advertised price must include all costs, fees, or charges that the customer must pay, excluding, state and local taxes, tag fees, registration fees, and title fees.
And (b) When two or more dealers advertise jointly, with or without participation of the franchisor, the advertised price must include the highest price of the vehicles being offered consistent with paragraph (a), or specify the price for each vehicle, respectively.
And (20) Fail to attach a conspicuous label to the window of a motor vehicle specifying any charge for predelivery services if the motor vehicle under consideration by a prospective purchaser is available for physical inspection by the purchaser. The label must include the following disclosure: "This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale." This requirement does not apply to the sale of motorcycles.
If you are reading this on my Blog, you can click on www.sb2150c2.html. If you are reading this in Hometown News, paste www.FLSenate.gov in your browser and then enter SB 2150 in the bill search on the left. Then click on “sb2150c2.html”. All of the read words with the lines through them are redacted language from the previous, weaker Dealer Fee law and the green words are new language. The first part of the bill is not about the Dealer Fee. Near the bottom of the bill is where you will find the Dealer Fee changes and additions.
I’m very encouraged by what I read. Even though it’s obvious that there will be no attempt this year to make the dealer fee illegal or, unfortunately, even put a cap on it, these are major improvements. The first big improvement is in defining the word “advertising” [Kind of like…”it depends on what the definition of what the word is, is”] If this bill becomes law, dealers must include their dealer fee in prices quoted to customers by word of mouth, on signage, and on the Internet. That means when you ask a salesman what the price of the car is he would have to quote you the full price, including his dealer fee and only excluding tax and tag.
Also, when several dealers of the same make advertise the same cars in one ad [most commonly sponsored by the manufacturer or distributor], the price must include the “highest price” taking into account each dealer’s Dealer Fee. In other words, if there were seven dealers advertising in one ad with seven different dealer fees ranging from $389 to $999, the price must include $999. In my opinion, this will have the effect of eliminating price advertising of this nature. The dealers won’t like this one bit because it removes the only advantage the dealer fee offers them which is hiding it from the customer.
And the final improvement is the requirement that the each dealer’s dealer fee be posted on the window of the car with a statement that "This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale." I like the idea that the Dealer Fee must be posted on the window but I don’t like the language that is supposed to be a disclosure. The disclosure should be “This charge represents PROFITS TO THE DEALER”…short and simple…end of conversation! “Costs” reimbursed to a retailer by the customer are PROFITS. Using the word “costs” is a shrewd attempt to disguise what is clearly profit to the dealer and only profit to the dealer. Furthermore, every manufacturer already generously reimburses their dealers for “inspecting, cleaning, and adjusting new vehicles”. Charging the customer for this is “double dipping”. Even if the manufacturer did not reimburse dealers for this, what is the logic of charging a customer separately for a car dealer’s costs of doing business? If a dealer is justified in charging you separately [on top of the price of the car] for washing it first, why shouldn’t he charge you separately for the salesman’s commission, his advertising and why not his phone and light bill?
We need to keep the pressure on our legislators. We are making progress only because of your grass root support, the Florida voters. Nothing matters more to a politician than votes and nothing matters more to the media than what interests their audience. The media is giving strong support to our cause now. This is a Quinella that the politicians cannot ignore…the media teamed with the voter.
Call my NO DEALER FEE HOTLINE, 800 909-9879 and record your opinion against the Dealer Fee. Your recording will be sent to Tallahassee. Keep yourself up to date on our progress by reading my blog, www.EarlStewartOnCars.com. You’ll also find lots of information on www.EarlStewart.com, www.YouTube.com/EarlStewartToyota.com, and on my Saturday morning talk show from 9-10 which you can stream by clicking on www.SeaviewAM960.com. You can read media coverage of our work by clicking on www.EarlStewartToyota.com and then click on “In the News”.
On March 25th Daniel Vasquez, consumer reporter for the Ft. Lauderdale Sun Sentinel, wrote a great column about the Dealer Fee and its unfairness to the car buyer. You can read this column by clicking on www.SunSentinel.com and then enter “Daniel Vasquez” in search, and then “Little-understood fees can add to a new car's bottom line.” There was a huge, supportive email response to this column. Mr. Vasquez listed the email addresses and phone numbers for Senator Alex Diaz de la Portilla, the chairman of the Senate Commerce committee [Contact Senate Commerce Committee Chair Alex Diaz de la Portilla at: portilla.alex.web@flsenate.govor call 850-487-5109 or 305-643-7200.]
On Thursday afternoon, April 3, I was driving my wife, Nancy, to Tampa for some minor surgery on her foot. Just before we arrived I received a call on my cell phone from Patricia Gosney, Senator Diaz de la Portilla’s assistant in Tallahassee. She told me that “somebody had showed the Senator a copy of my article” and she and the Senator were concerned because I had said that I was unable to contact him”. She asked me why I had said that and I explained that I had left several email and voice mail messages for the Senator and he had not returned any of them. Patricia did acknowledge that the Senator does receive “thousands” of emails and that it’s impossible to read all of them [One wonders, since most politicians do get lots of email, why they don’t let it be known that there will be no response or simply see to it that all emails are responded to?]. Patricia also told me that she was sure that I had not called the Tallahassee office. To which I responded that I’d called the Miami office and left unreturned voice mails. She said that she would look into that but she knows nothing about the Miami office. We agreed that from now on I would call Patricia in Tallahassee and she was kind enough to give me her email address which she told me she always responds to.
I asked Patricia to apologize on my behalf to Senator Diaz de la Portilla for expressing doubt about his strong support because of the breakdown of communications between us. Some of my concern was because of a conversation that I had with Senator Ken Pruitt’s Tallahassee assistant, Ann, about a week ago. She told me she would try to get some information on the progress of the Senate bill from the staff of Senator Diaz de la Portilla and when she did not get back to me, I assumed there was no progress. Ann had told me, that because there was no House sponsor of a sister bill, there was no chance of ever getting a law passed this year. Fortunately we now know Ann was mistaken.
The good news is that Patricia assured me that Senator Alex Diaz de la Portilla is solidly behind passing some legislation to better regulate the dealer fee. There is no longer a SB 954, the original shell bill for the Dealer Fee. The Senator has modified an existing bill, SB 2150 to include Dealer Fee regulations. And the really good news is that there is also a simultaneous House bill on this subject, HB 827. If you read my last column, you will know that his was why I was so concerned that there is no way we could get a bill through the legislature this year. Now we have a better chance.
Later that same afternoon, Thursday, April 3, shortly after the call from Patricia, Senator Jeff Atwater called me to assure me of his unswerving support of the anti Dealer Fee legislation. I hadn’t spoken to Senator Atwater in a long time. He explained how busy all of the legislators are and I know how busy Jeff is. I see his commercials on TV all the time. I like the one where he stares sternly at the evil insurance company executives and tells them how he will not stand still for their inhumane treatment of Florida’s insured. In fact, it reminds me a little bit of my TV commercial against the Dealer Fee.
Here is the language that was added to the existing bill, SB 2150 as of Thursday, April 3:
(6) "Advertised price" means the price as expressed in any statements that are transmitted orally, through written material, or through electronic means, or any illustration that is disseminated to the public or affixed to a motor vehicle and that is used in selling a motor vehicle or otherwise used to induce a person to enter into any obligation related to the motor vehicle.
And (a) The advertised price must include all costs, fees, or charges that the customer must pay, excluding, state and local taxes, tag fees, registration fees, and title fees.
And (b) When two or more dealers advertise jointly, with or without participation of the franchisor, the advertised price must include the highest price of the vehicles being offered consistent with paragraph (a), or specify the price for each vehicle, respectively.
And (20) Fail to attach a conspicuous label to the window of a motor vehicle specifying any charge for predelivery services if the motor vehicle under consideration by a prospective purchaser is available for physical inspection by the purchaser. The label must include the following disclosure: "This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale." This requirement does not apply to the sale of motorcycles.
If you are reading this on my Blog, you can click on www.sb2150c2.html. If you are reading this in Hometown News, paste www.FLSenate.gov in your browser and then enter SB 2150 in the bill search on the left. Then click on “sb2150c2.html”. All of the read words with the lines through them are redacted language from the previous, weaker Dealer Fee law and the green words are new language. The first part of the bill is not about the Dealer Fee. Near the bottom of the bill is where you will find the Dealer Fee changes and additions.
I’m very encouraged by what I read. Even though it’s obvious that there will be no attempt this year to make the dealer fee illegal or, unfortunately, even put a cap on it, these are major improvements. The first big improvement is in defining the word “advertising” [Kind of like…”it depends on what the definition of what the word is, is”] If this bill becomes law, dealers must include their dealer fee in prices quoted to customers by word of mouth, on signage, and on the Internet. That means when you ask a salesman what the price of the car is he would have to quote you the full price, including his dealer fee and only excluding tax and tag.
Also, when several dealers of the same make advertise the same cars in one ad [most commonly sponsored by the manufacturer or distributor], the price must include the “highest price” taking into account each dealer’s Dealer Fee. In other words, if there were seven dealers advertising in one ad with seven different dealer fees ranging from $389 to $999, the price must include $999. In my opinion, this will have the effect of eliminating price advertising of this nature. The dealers won’t like this one bit because it removes the only advantage the dealer fee offers them which is hiding it from the customer.
And the final improvement is the requirement that the each dealer’s dealer fee be posted on the window of the car with a statement that "This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale." I like the idea that the Dealer Fee must be posted on the window but I don’t like the language that is supposed to be a disclosure. The disclosure should be “This charge represents PROFITS TO THE DEALER”…short and simple…end of conversation! “Costs” reimbursed to a retailer by the customer are PROFITS. Using the word “costs” is a shrewd attempt to disguise what is clearly profit to the dealer and only profit to the dealer. Furthermore, every manufacturer already generously reimburses their dealers for “inspecting, cleaning, and adjusting new vehicles”. Charging the customer for this is “double dipping”. Even if the manufacturer did not reimburse dealers for this, what is the logic of charging a customer separately for a car dealer’s costs of doing business? If a dealer is justified in charging you separately [on top of the price of the car] for washing it first, why shouldn’t he charge you separately for the salesman’s commission, his advertising and why not his phone and light bill?
We need to keep the pressure on our legislators. We are making progress only because of your grass root support, the Florida voters. Nothing matters more to a politician than votes and nothing matters more to the media than what interests their audience. The media is giving strong support to our cause now. This is a Quinella that the politicians cannot ignore…the media teamed with the voter.
Call my NO DEALER FEE HOTLINE, 800 909-9879 and record your opinion against the Dealer Fee. Your recording will be sent to Tallahassee. Keep yourself up to date on our progress by reading my blog, www.EarlStewartOnCars.com. You’ll also find lots of information on www.EarlStewart.com, www.YouTube.com/EarlStewartToyota.com, and on my Saturday morning talk show from 9-10 which you can stream by clicking on www.SeaviewAM960.com. You can read media coverage of our work by clicking on www.EarlStewartToyota.com and then click on “In the News”.
Saturday, March 29, 2008
The Dealer Fee, Bestiality, and Tallahassee Politics
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Friday, March 07, 2008
A Victorious First Step toward Outlawing the Dealer Fee
My appearance before the Florida Senate Commerce Committee went quite well last Tuesday, March 4.
The Senators allowed me all the time I needed to make my presentation. I gave them copies of newspaper ads illustrating my objections to the dealer fee and copies of my presentation.
Many of the Senators on the committee asked me questions which were very supportive and positive.
Several representatives from the Florida Automobile Dealers Association [FADA] testified, including dealers Chris Craft from Tallahassee and Herb Yardley from Stuart and Ted Smith the President of FADA. The committee was negative toward most of their testimony and this was reflected by the Senators’ questions. Several Senators challenged the speakers on their misstatements of fact and obvious contradictions.
The Senate committee is preparing a bill which will be sent to the House for endorsement and then to Governor Crist to be signed into law. I don’t expect anything drastic like making dealer fees illegal but I do feel that there will be a lot more disclosure required and I do feel there will be a lot more enforcement of the existing and new law. This is not to say that I will settle for this kind of compromise, but it’s a first step of a long journey until we outlaw the Dealer Fee.
But we have to keep the pressure on because in Tallahassee (just like Washington D.C.), “the squeaky wheel gets the oil”. Bills have a way of dying a natural death before they can become law. It’s a long, rocky road between the Senate Commerce Committee and Governor Crist’s office. I will continue to push, with your vital support, for the outlawing of the Dealer Fee, this license to steal from Florida’s car buyers.
Please call [and encourage others to call] our “NO DEALER FEE HOTLINE”, 1-800 909-9879 and visit our Web page www.NoDealerFee.com.
Below are my comments to Senator Alex Diaz de la Portilla and his committee.
Comments to Florida Senate Commerce Committee
Tuesday, March 4, 2:30 PM, Tallahassee
My name is Earl Stewart. I was born in Ft. Lauderdale, FL in 1940. I graduated from PBHS in 1958, University of Florida in 1963, BS Physics, and Purdue University, 1964, MSIA. I worked for Westinghouse for four years as an Electronics Engineer. I jointed my father in business in 1968. He founded Stewart Pontiac in West Palm Beach in 1937. I’ve been primarily in the retail automobile business for the last 40 years. I’m currently the sole owner and general manager of Earl Stewart Toyota in North Palm Beach and have been in the same location for the last 33 years. My three sons are employed in my business and my wife, Nancy, is also involved part time.
I’ve been a member of the SFADA and the FADA for my entire career and have serviced as a director for both organizations and on the Executive committee of FADA. I am currently chairman of the board of FLADCO, a Florida dealer-owned cooperative buying company.
(1) What’s bad about the dealer fee?
(a) In most cases the customer either does not know he paid the dealer fee or believes it is some kind of federal, state, or local “official fee”.
(b) In practice dealers do not include the dealer fee in the price of the car that is quoted to the customer. It isn’t included in Internet quotes and also not in verbal quotes over the telephone or in person.
(c) Although Florida law says that the dealer fee must be included in the advertised price, this is not happening in most cases. In the first place, there is virtually no enforcement of this part of the law. I’ve shown Senators Jeff Atwater and Alex Diaz de la Portilla copies of auto classified ads flagrantly violating this part of the law addressing dealer fees. Those dealers who do technically comply, get around it in practice by what I call “the old stock number trick” [Explain].
(d) There is no cap on the dealer fee and each dealer chooses whatever fee he likes. There is no one name for the fee. The Senate Investigative Report discovered 22 names and they only scratched the surface.
(2) Why the existing Dealer Fee Law is a Bad Law?
(a) It is written in such a way that dealers’ legal counsel have advised them “If you charge one customer a dealer fee, you must charge all customers the same fee”. Now, when the rare very astute consumer questions the legitimacy of the dealer fee, the sales person is instructed to reply, “All dealers charge this fee” and “We are required by law to charge everybody this same fee”.
(b) There is a provision that a “group ad” does not have to include the dealer fee in the advertised price. The argument for the exception to this part of the law on advertised prices is that it would be “too confusing” to list all of the different prices resulting from different dealer fees by different dealers.
(c) The law does not address ads which show discounts from MSRP instead of an actual price. Because the MSRP is standardized, a discount from MSRP is no different than a quoted price.
(d) The law allows dealers to advertise just one car at the advertised price. Dealers don’t disclose this by using an obscure alpha numeric code, usually included along with all of the listed options and accessories. This, unknown to the reader of the ad, is a “stock number” which means that the dealer is advertising only this one car at the price which includes the dealer fee. A typical stock number looks like this…#A23554B. The ads often also say, “12 more models available at this price”. But the other models are not the advertised car and now the dealer can add the dealer fee on top of the advertised price. Car salesmen are not paid a commission on this advertised car. Car salesmen work on 100% commission and have no incentive to sell an advertised car. In fact, their incentive is to be sure that you buy a different car. The odds of a customer actually being able to buy an advertised car are “slim and none”.
(3) What is my true motivation for opposing the Dealer Fee?
(a) I strongly believe that I’m doing the right thing. The dealer fee is a profit to the dealer…pure and simple. The law alludes to it covering certain costs of the dealer and requires that the dealer so state next to his dealer fee, but this is fallacious. When a customer pays me a sum to cover one of my expenses, she is increasing my profits. Saying that a customer should pay for a dealers cost of paperwork or preparation of the car is no different than saying the customer should pay the salesman’s commission, the dealer’s advertising, or part of his power bill. Any business’s overhead costs should be priced into the price of its product…not passed along to their customer separately from the pricing of their product.
(b) Because all car dealers have different dealer fees and some range up to at least $1,000, we cannot compete fairly on a level playing field. I am unable to advertise prices because those dealers who have dealer fees can understate their real price, knowing that they can add their dealer fee on at the last minute. For example, a Toyota Yaris with an MSRP of $15,145 has a profit to the dealer of only $584. Al Hendrickson Toyota in Coconut Creek, FL has a $999 dealer fee. This dealer can advertise a new Yaris for below his cost and make better profit than I can if I advertised and sold the car at MSRP.
(c) Our customers should have the right to shop and compare prices of cars just like they do TV’s, refrigerators, computers, or any other product. The Monroney label made a standardized MSRP the law for new car manufacturers over 50 years ago. The purpose for this law was to give the consumer the ability to accurately compare prices between different car dealers. If a car buyer is considering a Chevrolet Impala with a specific MSRP, he can shop for the dealer who gives him the biggest discount. Now, with virtually every dealer adding a dealer fee of a different amount, the intent of this federal law is circumvented.
(d) I would be less than honest if I didn’t confess that I’m benefiting from the positive publicity I get by opposing the dealer fee. If I’m not successful, I’m still a winner because the car buyers of Florida do agree with me. Any dealer could achieve the same status as I by unilaterally giving up the dealer fee.
(e) Car dealers rank among the most vilified businesses and professions. Along with lawyers and politicians, we are commonly ridiculed by comedians like Jay Leno and David Letterman. My sons will take over my business one day and I have four grandchildren who may continue it even further. My oldest son, Earl III, told me something a few years ago that I will never forget. He said that he enjoyed working for me and he enjoyed his job very much but what was most important to him was that he was proud to tell his son, Jake, my grandson, what he did for a living.
The Senators allowed me all the time I needed to make my presentation. I gave them copies of newspaper ads illustrating my objections to the dealer fee and copies of my presentation.
Many of the Senators on the committee asked me questions which were very supportive and positive.
Several representatives from the Florida Automobile Dealers Association [FADA] testified, including dealers Chris Craft from Tallahassee and Herb Yardley from Stuart and Ted Smith the President of FADA. The committee was negative toward most of their testimony and this was reflected by the Senators’ questions. Several Senators challenged the speakers on their misstatements of fact and obvious contradictions.
The Senate committee is preparing a bill which will be sent to the House for endorsement and then to Governor Crist to be signed into law. I don’t expect anything drastic like making dealer fees illegal but I do feel that there will be a lot more disclosure required and I do feel there will be a lot more enforcement of the existing and new law. This is not to say that I will settle for this kind of compromise, but it’s a first step of a long journey until we outlaw the Dealer Fee.
But we have to keep the pressure on because in Tallahassee (just like Washington D.C.), “the squeaky wheel gets the oil”. Bills have a way of dying a natural death before they can become law. It’s a long, rocky road between the Senate Commerce Committee and Governor Crist’s office. I will continue to push, with your vital support, for the outlawing of the Dealer Fee, this license to steal from Florida’s car buyers.
Please call [and encourage others to call] our “NO DEALER FEE HOTLINE”, 1-800 909-9879 and visit our Web page www.NoDealerFee.com.
Below are my comments to Senator Alex Diaz de la Portilla and his committee.
Comments to Florida Senate Commerce Committee
Tuesday, March 4, 2:30 PM, Tallahassee
My name is Earl Stewart. I was born in Ft. Lauderdale, FL in 1940. I graduated from PBHS in 1958, University of Florida in 1963, BS Physics, and Purdue University, 1964, MSIA. I worked for Westinghouse for four years as an Electronics Engineer. I jointed my father in business in 1968. He founded Stewart Pontiac in West Palm Beach in 1937. I’ve been primarily in the retail automobile business for the last 40 years. I’m currently the sole owner and general manager of Earl Stewart Toyota in North Palm Beach and have been in the same location for the last 33 years. My three sons are employed in my business and my wife, Nancy, is also involved part time.
I’ve been a member of the SFADA and the FADA for my entire career and have serviced as a director for both organizations and on the Executive committee of FADA. I am currently chairman of the board of FLADCO, a Florida dealer-owned cooperative buying company.
(1) What’s bad about the dealer fee?
(a) In most cases the customer either does not know he paid the dealer fee or believes it is some kind of federal, state, or local “official fee”.
(b) In practice dealers do not include the dealer fee in the price of the car that is quoted to the customer. It isn’t included in Internet quotes and also not in verbal quotes over the telephone or in person.
(c) Although Florida law says that the dealer fee must be included in the advertised price, this is not happening in most cases. In the first place, there is virtually no enforcement of this part of the law. I’ve shown Senators Jeff Atwater and Alex Diaz de la Portilla copies of auto classified ads flagrantly violating this part of the law addressing dealer fees. Those dealers who do technically comply, get around it in practice by what I call “the old stock number trick” [Explain].
(d) There is no cap on the dealer fee and each dealer chooses whatever fee he likes. There is no one name for the fee. The Senate Investigative Report discovered 22 names and they only scratched the surface.
(2) Why the existing Dealer Fee Law is a Bad Law?
(a) It is written in such a way that dealers’ legal counsel have advised them “If you charge one customer a dealer fee, you must charge all customers the same fee”. Now, when the rare very astute consumer questions the legitimacy of the dealer fee, the sales person is instructed to reply, “All dealers charge this fee” and “We are required by law to charge everybody this same fee”.
(b) There is a provision that a “group ad” does not have to include the dealer fee in the advertised price. The argument for the exception to this part of the law on advertised prices is that it would be “too confusing” to list all of the different prices resulting from different dealer fees by different dealers.
(c) The law does not address ads which show discounts from MSRP instead of an actual price. Because the MSRP is standardized, a discount from MSRP is no different than a quoted price.
(d) The law allows dealers to advertise just one car at the advertised price. Dealers don’t disclose this by using an obscure alpha numeric code, usually included along with all of the listed options and accessories. This, unknown to the reader of the ad, is a “stock number” which means that the dealer is advertising only this one car at the price which includes the dealer fee. A typical stock number looks like this…#A23554B. The ads often also say, “12 more models available at this price”. But the other models are not the advertised car and now the dealer can add the dealer fee on top of the advertised price. Car salesmen are not paid a commission on this advertised car. Car salesmen work on 100% commission and have no incentive to sell an advertised car. In fact, their incentive is to be sure that you buy a different car. The odds of a customer actually being able to buy an advertised car are “slim and none”.
(3) What is my true motivation for opposing the Dealer Fee?
(a) I strongly believe that I’m doing the right thing. The dealer fee is a profit to the dealer…pure and simple. The law alludes to it covering certain costs of the dealer and requires that the dealer so state next to his dealer fee, but this is fallacious. When a customer pays me a sum to cover one of my expenses, she is increasing my profits. Saying that a customer should pay for a dealers cost of paperwork or preparation of the car is no different than saying the customer should pay the salesman’s commission, the dealer’s advertising, or part of his power bill. Any business’s overhead costs should be priced into the price of its product…not passed along to their customer separately from the pricing of their product.
(b) Because all car dealers have different dealer fees and some range up to at least $1,000, we cannot compete fairly on a level playing field. I am unable to advertise prices because those dealers who have dealer fees can understate their real price, knowing that they can add their dealer fee on at the last minute. For example, a Toyota Yaris with an MSRP of $15,145 has a profit to the dealer of only $584. Al Hendrickson Toyota in Coconut Creek, FL has a $999 dealer fee. This dealer can advertise a new Yaris for below his cost and make better profit than I can if I advertised and sold the car at MSRP.
(c) Our customers should have the right to shop and compare prices of cars just like they do TV’s, refrigerators, computers, or any other product. The Monroney label made a standardized MSRP the law for new car manufacturers over 50 years ago. The purpose for this law was to give the consumer the ability to accurately compare prices between different car dealers. If a car buyer is considering a Chevrolet Impala with a specific MSRP, he can shop for the dealer who gives him the biggest discount. Now, with virtually every dealer adding a dealer fee of a different amount, the intent of this federal law is circumvented.
(d) I would be less than honest if I didn’t confess that I’m benefiting from the positive publicity I get by opposing the dealer fee. If I’m not successful, I’m still a winner because the car buyers of Florida do agree with me. Any dealer could achieve the same status as I by unilaterally giving up the dealer fee.
(e) Car dealers rank among the most vilified businesses and professions. Along with lawyers and politicians, we are commonly ridiculed by comedians like Jay Leno and David Letterman. My sons will take over my business one day and I have four grandchildren who may continue it even further. My oldest son, Earl III, told me something a few years ago that I will never forget. He said that he enjoyed working for me and he enjoyed his job very much but what was most important to him was that he was proud to tell his son, Jake, my grandson, what he did for a living.
Wednesday, March 05, 2008
Senate Commission on Dealer Fee
My appearance before the Senate Commerce Committee went quite well yesterday.
The Senators allowed me all the time I needed to make my presentation. I gave them copies of newspaper ads illustrating my objections to the dealer fee and copies of my presentation.
Many of the Senators on the committee asked me questions which were very supportive and positive.
Several people from the Florida Automobile Dealers Association testified, including dealers Chris Craft and Herb Yardley and Ted Smith the President of FADA. The committee was negative toward most of their testimony and this was reflected by their questions. Several Senators challenged the speakers on their misstatements of fact and obvious contradictions.
The Senate committee is preparing a bill which will be sent to the House for endorsement and then to Governor Crist to be signed into law. I don’t expect anything drastic like making dealer fees illegal but I do feel that there will be a lot more disclosure required and I do feel there will be a lot more enforcement of the existing and new law.
Please check out the article that appeared in today's Sun-Sentinel about yesterday's hearing:
Senate panel takes up crusade against auto dealership fees
By Joshua Hafenbrack
Tallahassee Bureau
March 5, 2008
TALLAHASSEE
In South Florida car dealer Earl Stewart's ubiquitous TV ad testimonials, he likes to point out he doesn't charge "dealer fees." He even started a radio show and a blog to rail against the fees charged by many of his competitors in Palm Beach and Broward counties.They're the often-hidden costs — running $500 or more in many cases — tacked onto a car's price once customers are hauled into a back office to fill out financing papers.Now Stewart's fight against dealer fees has moved to the state Legislature, with a Senate committee agreeing Tuesday to craft consumer protections that would require greater transparency about the fees that usually aren't included in price quotes or Internet advertising.Testifying before the Senate Commerce Committee, Stewart, who owns a Toyota dealership in North Palm Beach, said dealer fees are meant to obscure a car's real price from customers and pad dealers' profit margins."It prohibits the legitimate dealer from competing on a level playing field," said Stewart, a Fort Lauderdale native whose family has been in the car business in South Florida since 1937.After hearing testimony from South Florida car dealers on both sides of the issues, the Senate panel moved to draft legislation to require dealers to disclose dealer fees in their cars' sticker prices.This approach doesn't go as far as 13 other states that have capped dealer fees, with limits ranging from $45 to $250, according to Senate investigators.Herbert Yardley, whose owns Massey Yardley Chrysler Jeep in Plantation, said the $599 dealer fee he charges is just one part of arriving at a car's overall price, a process he described as an "art, not a science." "I don't know that the state does belong in pricing," Yardley told senators. "Please let pricing be an individual issue."Josh Hafenbrack can be reached at jhafenbrack@sun-sentinel.com or 850-224-6214.
The Senators allowed me all the time I needed to make my presentation. I gave them copies of newspaper ads illustrating my objections to the dealer fee and copies of my presentation.
Many of the Senators on the committee asked me questions which were very supportive and positive.
Several people from the Florida Automobile Dealers Association testified, including dealers Chris Craft and Herb Yardley and Ted Smith the President of FADA. The committee was negative toward most of their testimony and this was reflected by their questions. Several Senators challenged the speakers on their misstatements of fact and obvious contradictions.
The Senate committee is preparing a bill which will be sent to the House for endorsement and then to Governor Crist to be signed into law. I don’t expect anything drastic like making dealer fees illegal but I do feel that there will be a lot more disclosure required and I do feel there will be a lot more enforcement of the existing and new law.
Please check out the article that appeared in today's Sun-Sentinel about yesterday's hearing:
Senate panel takes up crusade against auto dealership fees
By Joshua Hafenbrack
Tallahassee Bureau
March 5, 2008
TALLAHASSEE
In South Florida car dealer Earl Stewart's ubiquitous TV ad testimonials, he likes to point out he doesn't charge "dealer fees." He even started a radio show and a blog to rail against the fees charged by many of his competitors in Palm Beach and Broward counties.They're the often-hidden costs — running $500 or more in many cases — tacked onto a car's price once customers are hauled into a back office to fill out financing papers.Now Stewart's fight against dealer fees has moved to the state Legislature, with a Senate committee agreeing Tuesday to craft consumer protections that would require greater transparency about the fees that usually aren't included in price quotes or Internet advertising.Testifying before the Senate Commerce Committee, Stewart, who owns a Toyota dealership in North Palm Beach, said dealer fees are meant to obscure a car's real price from customers and pad dealers' profit margins."It prohibits the legitimate dealer from competing on a level playing field," said Stewart, a Fort Lauderdale native whose family has been in the car business in South Florida since 1937.After hearing testimony from South Florida car dealers on both sides of the issues, the Senate panel moved to draft legislation to require dealers to disclose dealer fees in their cars' sticker prices.This approach doesn't go as far as 13 other states that have capped dealer fees, with limits ranging from $45 to $250, according to Senate investigators.Herbert Yardley, whose owns Massey Yardley Chrysler Jeep in Plantation, said the $599 dealer fee he charges is just one part of arriving at a car's overall price, a process he described as an "art, not a science." "I don't know that the state does belong in pricing," Yardley told senators. "Please let pricing be an individual issue."Josh Hafenbrack can be reached at jhafenbrack@sun-sentinel.com or 850-224-6214.
Saturday, March 01, 2008
LET YOUR VOICE BE HEARD: OUTLAW THE DEALER FEE!
You can help us make the “DEALER FEE” Illegal in Florida.
If you call our No Dealer Fee Hotline, you can voice your opinion on the Dealer Fee, to the Florida Senate Commerce Committee.
They are conducting a hearing this Tuesday, March 4th, in Tallahassee to hear consumers views on whether this “license to steal” should be made illegal in Florida, as it has in 13 other states.
Click on http://www.nodealerfee.com/ for more information.
If you call our No Dealer Fee Hotline, you can voice your opinion on the Dealer Fee, to the Florida Senate Commerce Committee.
They are conducting a hearing this Tuesday, March 4th, in Tallahassee to hear consumers views on whether this “license to steal” should be made illegal in Florida, as it has in 13 other states.
Click on http://www.nodealerfee.com/ for more information.
PLEASE DIAL 1-800-909-9879
Friday, February 22, 2008
FLORIDA POLITICS AND DEALER FEES
Boy am I getting a fast-track political education! I reached the ripe old age of 67 remaining a political novice. Lots of friends and associates kid me about being so politically naive. It’s not that I don’t read a lot of newspapers and watch a lot of politics on the news. I haven’t missed a vote for a local, state, or national candidate since 1961 when I became 21. But voting was as far as I went for most of my adult life. I did start making political contributions when I became a director of the Florida Automobile Dealers Association (FADA) a few years back. I felt that as a director I had to set an example. I remember asking my fellow dealers why we were giving money to politicians whose political philosophies were anti-business and they answered “because he promised to help us”. How could I disagree with that logic? The car dealers contribute individually, to a national PAC (Political Action Committee), DEAC and to a state PAC, CAR PAC. FADA uses this money to contribute to the campaigns of those politicians who promise to help car dealers get their agenda enacted into laws in Tallahassee. The #1 agenda item in 2008 is SAVE OUR DEALER FEE. Monies raised from members’ dues and other fund raising methods pay the salaries of lobbyists who spend lots of time schmoozing, persuading, and influencing, by any legal means, the votes of Florida Senators and Representatives.
I guess you could call this period of time in my life, Politics 101. Now that I’ve taken a position against the FADA and begun advocating making the dealer fee illegal, I’m working on my advanced degree in Political Science. There’s no better teacher than experience and that is what I’m getting. I’ve been publically decrying the dealer fee for several years. I’ve told anybody who will listen that I think it’s wrong that Florida law allows and in some ways facilitates and legitimatizes car dealers in increasing the price (and his profit) on the price he quotes his customers in a manner that often goes undetected or assumed by the buyer to be an official fee.
I guess some of the folks who listened to what I had to say about the dealer fee called Ken Pruitt who is the President of the Florida Senate. Under the pressure of his constituents, he formed a committee to investigate the dealer’s fee. This was a bit awkward for Senator Pruitt because the FADA is a very big supporter of his. This was another lesson in my political education. No matter how much a politician accepts in contributions from an individual, company, or organization, the voice of his constituents will trump that influence. The Senate investigation was not a very good one. In fact, it relied heavily on the input of the FADA. The Senate committee did not talk to a single car buyer. Senator Jeff Atwater told me that he was quite disappointed with this obvious flaw in the methodology.
By the way, Senator Jeff Atwater has been “anointed” to be the next President of the Senate, replacing Ken Pruitt, if he wins re-election this year. The President of the Senate is arguably the most powerful politician in Tallahassee. Senator Atwater knows that he has his work cut out for him to win re-election. This is because we also elect the next President of the United States this November. Senator Atwater’s district is heavily Democratic but he’s a Republican. In presidential election years there is always a much larger voter turnout. Former Democratic state Senator Skipp Campbell is running for Jeff Atwater’s Senate seat. It’s going to be a very close race to see who gets elected, Jeff or Skipp. It might not take much to swing enough voters one way or the other. Virtually all registered voters buy cars and that means almost all of them pay a dealer fee if they buy their cars in Florida. I’ll just bet that if somebody let all of the voters in Jeff Atwater’s district know just what a rip off the dealer fee is, this might influence who they vote for in the next election. Jeff has appeared on my radio show, met with me in person, and talked to me often on the phone about this subject. He believes that the current law addressing the dealer’s fee needs to be changed. He strongly believes that there should be much better enforcement of the current law.
On the other hand, Skipp Campbell simply believes that the dealer fee should be made illegal…no ifs, ands, buts, or compromises. In a meeting with Skipp three weeks ago, he told me that, if elected, he would work hard to make the dealer fee illegal. This is in contrast to Jeff Atwater’s view that a compromise between the consumers and car dealers can be accomplished by modifying the existing law and improving its enforcement by the Attorney General’s Office. In my opinion this issue between the two candidates can be a great thing for the car-buyers of Florida.
We have another politician who has appeared on the scene, Senator Alex Diaz de Portilla from Miami. Senator Portilla is the chairman of the Senate Commerce Committee, addressing issues like the dealer fee that affects consumers. Senator Portilla’s committee held a hearing to discuss the Senate Report on the Dealer Fee on Tuesday, February 19. I sent the chairman and all the other senators on his committee lots of information including my postings from this blog on the dealer fee and dozens of emails I have received from car-buyers who consider the dealer fee a “license to steal”. Chairman Portilla called me after the hearing and told me that he decided to table the dealer fee issue until the next committee meeting on Tuesday, March 4 at 1:15 PM. That is this coming Tuesday. He tabled the dealer fee issue because there were no consumers there to argue against it. But, he told me, the room was full of car dealers and their lobbyist. FADA had rallied the troops to defend their precious dealer fee. Senator Portilla saw no sense in hearing only one side of the debate and tabled it until this Tuesday. He has agreed to meet with me personally on Thursday or Friday, February 28 or 29.
I’m writing this column on Friday, February 22 and it won't be read in The Hometown News until a week later. It will be posted here on EarlStewartOnCars.com today. That gives me 11 days until the next Commerce Committee hearing to rally some car-buyers to sit alongside FADA’s car dealers and lobbyists. Only the loud, honest, voices of the voter’s of Florida can trump FADA. Will we be successful?
You can help me by calling and/or emailing Senator Portilla and the members of his committee:
First Name
Last Name
Dst
City
Local Phone
Email Address
Victor
Crist
12
Tampa
(850) 487-5068
crist.victor.web@flsenate.gov
Alex
Diaz de la Portilla
36
Miami
(850) 487-5109
portilla.alex.web@flsenate.gov
Rudy
Garcia
40
Hialeah
(850) 487-5106
garcia.rudy.web@flsenate.gov
Charlie
Justice
16
St. Petersburg
(850) 487-5075
justice.charlie.web@flsenate.gov
Evelyn J.
Lynn
7
Daytona Beach
(850) 487-5033
lynn.evelyn.web@flsenate.gov
Steve
Oelrich
14
Gainesville
(850) 487-5020
oelrich.steve.web@flsenate.gov
Jeremy
Ring
32
Margate
(850) 487-5094
ring.jeremy.web@flsenate.gov
Burt L.
Saunders (B)
37
Naples
(850) 487-5124
saunders.burt.web@flsenate.gov
Gary
Siplin
19
Orlando
(850) 487-5190
siplin.gary.web@flsenate.gov
I guess you could call this period of time in my life, Politics 101. Now that I’ve taken a position against the FADA and begun advocating making the dealer fee illegal, I’m working on my advanced degree in Political Science. There’s no better teacher than experience and that is what I’m getting. I’ve been publically decrying the dealer fee for several years. I’ve told anybody who will listen that I think it’s wrong that Florida law allows and in some ways facilitates and legitimatizes car dealers in increasing the price (and his profit) on the price he quotes his customers in a manner that often goes undetected or assumed by the buyer to be an official fee.
I guess some of the folks who listened to what I had to say about the dealer fee called Ken Pruitt who is the President of the Florida Senate. Under the pressure of his constituents, he formed a committee to investigate the dealer’s fee. This was a bit awkward for Senator Pruitt because the FADA is a very big supporter of his. This was another lesson in my political education. No matter how much a politician accepts in contributions from an individual, company, or organization, the voice of his constituents will trump that influence. The Senate investigation was not a very good one. In fact, it relied heavily on the input of the FADA. The Senate committee did not talk to a single car buyer. Senator Jeff Atwater told me that he was quite disappointed with this obvious flaw in the methodology.
By the way, Senator Jeff Atwater has been “anointed” to be the next President of the Senate, replacing Ken Pruitt, if he wins re-election this year. The President of the Senate is arguably the most powerful politician in Tallahassee. Senator Atwater knows that he has his work cut out for him to win re-election. This is because we also elect the next President of the United States this November. Senator Atwater’s district is heavily Democratic but he’s a Republican. In presidential election years there is always a much larger voter turnout. Former Democratic state Senator Skipp Campbell is running for Jeff Atwater’s Senate seat. It’s going to be a very close race to see who gets elected, Jeff or Skipp. It might not take much to swing enough voters one way or the other. Virtually all registered voters buy cars and that means almost all of them pay a dealer fee if they buy their cars in Florida. I’ll just bet that if somebody let all of the voters in Jeff Atwater’s district know just what a rip off the dealer fee is, this might influence who they vote for in the next election. Jeff has appeared on my radio show, met with me in person, and talked to me often on the phone about this subject. He believes that the current law addressing the dealer’s fee needs to be changed. He strongly believes that there should be much better enforcement of the current law.
On the other hand, Skipp Campbell simply believes that the dealer fee should be made illegal…no ifs, ands, buts, or compromises. In a meeting with Skipp three weeks ago, he told me that, if elected, he would work hard to make the dealer fee illegal. This is in contrast to Jeff Atwater’s view that a compromise between the consumers and car dealers can be accomplished by modifying the existing law and improving its enforcement by the Attorney General’s Office. In my opinion this issue between the two candidates can be a great thing for the car-buyers of Florida.
We have another politician who has appeared on the scene, Senator Alex Diaz de Portilla from Miami. Senator Portilla is the chairman of the Senate Commerce Committee, addressing issues like the dealer fee that affects consumers. Senator Portilla’s committee held a hearing to discuss the Senate Report on the Dealer Fee on Tuesday, February 19. I sent the chairman and all the other senators on his committee lots of information including my postings from this blog on the dealer fee and dozens of emails I have received from car-buyers who consider the dealer fee a “license to steal”. Chairman Portilla called me after the hearing and told me that he decided to table the dealer fee issue until the next committee meeting on Tuesday, March 4 at 1:15 PM. That is this coming Tuesday. He tabled the dealer fee issue because there were no consumers there to argue against it. But, he told me, the room was full of car dealers and their lobbyist. FADA had rallied the troops to defend their precious dealer fee. Senator Portilla saw no sense in hearing only one side of the debate and tabled it until this Tuesday. He has agreed to meet with me personally on Thursday or Friday, February 28 or 29.
I’m writing this column on Friday, February 22 and it won't be read in The Hometown News until a week later. It will be posted here on EarlStewartOnCars.com today. That gives me 11 days until the next Commerce Committee hearing to rally some car-buyers to sit alongside FADA’s car dealers and lobbyists. Only the loud, honest, voices of the voter’s of Florida can trump FADA. Will we be successful?
You can help me by calling and/or emailing Senator Portilla and the members of his committee:
First Name
Last Name
Dst
City
Local Phone
Email Address
Victor
Crist
12
Tampa
(850) 487-5068
crist.victor.web@flsenate.gov
Alex
Diaz de la Portilla
36
Miami
(850) 487-5109
portilla.alex.web@flsenate.gov
Rudy
Garcia
40
Hialeah
(850) 487-5106
garcia.rudy.web@flsenate.gov
Charlie
Justice
16
St. Petersburg
(850) 487-5075
justice.charlie.web@flsenate.gov
Evelyn J.
Lynn
7
Daytona Beach
(850) 487-5033
lynn.evelyn.web@flsenate.gov
Steve
Oelrich
14
Gainesville
(850) 487-5020
oelrich.steve.web@flsenate.gov
Jeremy
Ring
32
Margate
(850) 487-5094
ring.jeremy.web@flsenate.gov
Burt L.
Saunders (B)
37
Naples
(850) 487-5124
saunders.burt.web@flsenate.gov
Gary
Siplin
19
Orlando
(850) 487-5190
siplin.gary.web@flsenate.gov
Sunday, February 03, 2008
MY CONVERSATION WITH SENATOR ATWATER ON THE DEALER FEE
Followers of this column know that I’ve been trying for several weeks to discuss the dealer fee issue with Senator Jeff Atwater, the next President of the Florida Senate. I was successful and I met with the Senator for nearly two hours on Saturday, January 26. Not only that, but he agreed to call in to my radio show [Seaview AM 960, WSVU airing Saturday mornings between 9 and 10] this Saturday, February 9].
Regular readers please excuse a little recap to bring those up to date who aren’t aware of the dealer fee and the pending legislation. The dealer fee is a “license to steal”, made legal by a bad Florida law. A dealer fee goes by at least 22 different names, according to the State Senate Investigating Committee. Dealer fee, documentary fee, dealer prep fee, and administrative are just a few. The highest dealer fee I know of is $999 charged by a dealer in Coconut Creek (west of Ft. Lauderdale). The lowest I know of is $389 and the average is around $700. This “fee” is just dealer profit disguised to make people believe they are paying an official fee to state, local, or federal government. Lots of dealers omit this from their advertised price (which is illegal) and surprise those customers who happen to notice it in the paperwork when they take delivery. Most customers never notice the dealer fee at all. Those who advertise legally and do include the dealer fee in the price, generally advertise just one vehicle at that price. Unfortunately this specific car has always “just been sold” when you come in on the ad. But, they tell you, we have lots more just like it. The other cars might be just like it, but not the price. Now, the law allows the dealer to add the dealer fee to the price. Enough people have complained about this that Ken Pruitt, the current Senate President, formed a committee to investigate making the dealer fee illegal or capping it. This recommendation was sent to the legislature several months ago. You can read this report by clicking on http://www.earlstewart.com/.
In my meeting with Jeff Atwater I was quite surprised to learn that he knew virtually nothing about the dealer fee or the Senate Investigating Committee’s report. There are many, many issues that state senators must deal with and this is just one. Jeff Atwater has been spending a large amount of his time on insurance and property tax issues. I furnished him with lots of information including a copy of the Senate Investigating Committee’s report, copies of every auto classified ad in the PB Post on Saturday [with my annotations] , January 26, copies of dealer’s vehicle buyers’ orders disclosing their dealer fees, and copies of articles I had written on this subject for my Blog and Hometown News. With all modesty, I must say that I did a very good job of educating Jeff Atwater on why this dealer fee is so bad for Florida car buyers.
The Senator expressed surprise and disappointment with the lack of thoroughness of the Senate committee’s report. The committee worked hand in hand with the Florida Automobile Dealers Association (FADA) who is heavily lobbying the Florida legislature for the preservation of the dealer fee. I told Jeff Atwater that this was like “sending a rabbit after lettuce”. Furthermore, no one in the senate committee ever talked to a single consumer, a car buyer. How can a committee possible make an intelligent recommendation that will protect the rights of the consumer when they hear only the car dealer’s side of the story?
I showed Jeff Atwater quotes from the FADA magazine, Velocity, “Senator Atwater- to support his campaign for Senate because he has promised to help us again this year-goal is $50,000.” Dealers have already contributed $24,500. The FADA has listed the preservation of the Dealer Fee as their #1 agenda item…”The Senate’s threat to cap your dealership service fees could reduce your gross profit on each new and used vehicle”. And FADA is hiring new lobbyist. Quoting from Velocity, “HELP US HIRE A LOBBYING TEAM. The attack on your dealer service fee will require a TEAM of new lobbyists-those funds cannot come from our political action committee (CAR-PAC). Every dealer who charges a service fee should cut a healthy check payable to “FADA” for our legislative action fund. We will hire top-notch lobbyists with your contributions.”
It’s clear that the car dealers of Florida will fight tooth, nail, and wallet to preserve their Florida State “license to steal” aka the Dealer Fee. But the good news is that we have a huge opportunity to prevail with the help of Senator Jeff Atwater. What can you, the readers of this column and my Blog, do? Let Jeff Atwater know how you feel. Relate your experience with the dealer fee when you bought your last car. Most car buyers don’t even realize they paid a dealer fee but the chances are 99.9% that if you bought a car in Florida you paid one. You can email Jeff Atwater at Jeff@SenatorJeff.com and you can call him at 561 625-5102. If you email him, please cc me at earls@earlstewarttoyota.com. If you have a question you would like me to ask the Senator when he calls into my radio show this February 9 between 9:05 AM and 9:20 AM, please email it to earlstewart@seaviewam960.com or you can call me on my cell phone at 561 358-1474.
Regular readers please excuse a little recap to bring those up to date who aren’t aware of the dealer fee and the pending legislation. The dealer fee is a “license to steal”, made legal by a bad Florida law. A dealer fee goes by at least 22 different names, according to the State Senate Investigating Committee. Dealer fee, documentary fee, dealer prep fee, and administrative are just a few. The highest dealer fee I know of is $999 charged by a dealer in Coconut Creek (west of Ft. Lauderdale). The lowest I know of is $389 and the average is around $700. This “fee” is just dealer profit disguised to make people believe they are paying an official fee to state, local, or federal government. Lots of dealers omit this from their advertised price (which is illegal) and surprise those customers who happen to notice it in the paperwork when they take delivery. Most customers never notice the dealer fee at all. Those who advertise legally and do include the dealer fee in the price, generally advertise just one vehicle at that price. Unfortunately this specific car has always “just been sold” when you come in on the ad. But, they tell you, we have lots more just like it. The other cars might be just like it, but not the price. Now, the law allows the dealer to add the dealer fee to the price. Enough people have complained about this that Ken Pruitt, the current Senate President, formed a committee to investigate making the dealer fee illegal or capping it. This recommendation was sent to the legislature several months ago. You can read this report by clicking on http://www.earlstewart.com/.
In my meeting with Jeff Atwater I was quite surprised to learn that he knew virtually nothing about the dealer fee or the Senate Investigating Committee’s report. There are many, many issues that state senators must deal with and this is just one. Jeff Atwater has been spending a large amount of his time on insurance and property tax issues. I furnished him with lots of information including a copy of the Senate Investigating Committee’s report, copies of every auto classified ad in the PB Post on Saturday [with my annotations] , January 26, copies of dealer’s vehicle buyers’ orders disclosing their dealer fees, and copies of articles I had written on this subject for my Blog and Hometown News. With all modesty, I must say that I did a very good job of educating Jeff Atwater on why this dealer fee is so bad for Florida car buyers.
The Senator expressed surprise and disappointment with the lack of thoroughness of the Senate committee’s report. The committee worked hand in hand with the Florida Automobile Dealers Association (FADA) who is heavily lobbying the Florida legislature for the preservation of the dealer fee. I told Jeff Atwater that this was like “sending a rabbit after lettuce”. Furthermore, no one in the senate committee ever talked to a single consumer, a car buyer. How can a committee possible make an intelligent recommendation that will protect the rights of the consumer when they hear only the car dealer’s side of the story?
I showed Jeff Atwater quotes from the FADA magazine, Velocity, “Senator Atwater- to support his campaign for Senate because he has promised to help us again this year-goal is $50,000.” Dealers have already contributed $24,500. The FADA has listed the preservation of the Dealer Fee as their #1 agenda item…”The Senate’s threat to cap your dealership service fees could reduce your gross profit on each new and used vehicle”. And FADA is hiring new lobbyist. Quoting from Velocity, “HELP US HIRE A LOBBYING TEAM. The attack on your dealer service fee will require a TEAM of new lobbyists-those funds cannot come from our political action committee (CAR-PAC). Every dealer who charges a service fee should cut a healthy check payable to “FADA” for our legislative action fund. We will hire top-notch lobbyists with your contributions.”
It’s clear that the car dealers of Florida will fight tooth, nail, and wallet to preserve their Florida State “license to steal” aka the Dealer Fee. But the good news is that we have a huge opportunity to prevail with the help of Senator Jeff Atwater. What can you, the readers of this column and my Blog, do? Let Jeff Atwater know how you feel. Relate your experience with the dealer fee when you bought your last car. Most car buyers don’t even realize they paid a dealer fee but the chances are 99.9% that if you bought a car in Florida you paid one. You can email Jeff Atwater at Jeff@SenatorJeff.com and you can call him at 561 625-5102. If you email him, please cc me at earls@earlstewarttoyota.com. If you have a question you would like me to ask the Senator when he calls into my radio show this February 9 between 9:05 AM and 9:20 AM, please email it to earlstewart@seaviewam960.com or you can call me on my cell phone at 561 358-1474.
Monday, January 28, 2008
BEWARE OF DECEPTIVE INTERNET CAR PRICING
BULLETIN: Senator Jeff Atwater will call into my radio show this Saturday, February 9 at 9:05 AM. You can listen in at Seaview AM 960, WSVU. You can stream the show on the Internet by clicking on www.seaviewam960.com.
Last September, I wrote a column for this newspaper entitled “The Internet Price is the Lowest Price for a New Car”. If you missed that, you can read all of my columns at www.EarlStewartOnCars.com. Although, I still believe you can find your best price on the Internet, I thought that I should write another column to stress how careful you must be in determining whether or not you have a real, bottom line, out-the-door price.
The reason that a dealer always tries to post his lowest new car price on the Internet is simple. If he doesn’t the Internet shopper will simply ignore the price quote and buy from another dealer who has a lower price. A car dealer gets “just one chance” to sell you a car when he puts his price out on the Internet. The Internet is theoretically the purest and best form of a competitive marketplace, favoring the buyer. Think about it…if you wanted to take the time you could get a price quote from every Honda, Toyota, or Ford dealer in the USA! There are about 1,300 Toyota dealers in the USA. It might take you a while (about 8 days if you worked 8 hours a day and spent 3 minutes per email), but you sure would know who was selling your selected model Toyota for the lowest price.
Whether you are reading newspaper ads, watching TV ads, reading direct mail advertising, or surfing car a dealer’s Web site you have to be careful of deception. Internet advertising on car dealer’s Web sites and their Internet price quotes can be more deceptive than other media. This is because the Internet is the “new frontier”. Legislation has not caught up with the Internet like it has newspaper, TV, and radio advertising. A dealer can get away with a lot more on his Web site and price quotes than he can in a newspaper ad. Electronic media and newspaper advertising are also a lot more visible to the regulators than the Internet.
I’ll give you an example of the type of violation you must be wary of. There’s a car dealer in West Palm Beach who quotes prices to his customers over the Internet excluding $699.95 for a “dealer fee” plus $199.95 for a “doc fee”. This totals $899.90 in a surprise price increase when you come into the dealership to pick up your car. The written warning you have is an asterisk denoting some fine print at the bottom of the Internet quote that says *plus tax, tag, and fees. The “fees” mean $899 in additional price and profit to the dealer on top of the price you were quoted. As if this practice isn’t bad enough, many people come in, sign the papers, and drive their new car home without even realizing that they paid an extra $899.90 because it is hidden in the voluminous paperwork that you sign rapidly in the dealer’s finance office.
Your defense against this sort of thing is to call those dealers who have given you the lowest price quotes on the vehicle you want to buy. Start with the lowest price and simply ask, “Is there anything else added to my price other than Florida sales tax and a state fee for a license tag or tag transfer?” If they do add something, find out specifically what they do add so that you know you have an “out-the-door”, bottom line price when you come in to take delivery. If they won’t give you a clear answer or are ambiguous, hang up and call the next dealer.
Dealers who advertise deceptively have the philosophy that all that counts with their advertising is to “get them in the door”. Another slang dealers use for this is “driving floor traffic”. They calculate that if they can trick enough people to come through the door, they will be able to fool a certain percentage of them. It’s like Abraham Lincoln said, “You may fool all the people some of the time, you can even fool some of the people all of the time, but you cannot fool all of the people all of the time.” Well these dealers don’t have to fool all of the people to make lots of money. All they have to do is fool some of the people all of the time and that’s exactly what their advertising is designed to do. Don’t be one of those who are fooled.
Last September, I wrote a column for this newspaper entitled “The Internet Price is the Lowest Price for a New Car”. If you missed that, you can read all of my columns at www.EarlStewartOnCars.com. Although, I still believe you can find your best price on the Internet, I thought that I should write another column to stress how careful you must be in determining whether or not you have a real, bottom line, out-the-door price.
The reason that a dealer always tries to post his lowest new car price on the Internet is simple. If he doesn’t the Internet shopper will simply ignore the price quote and buy from another dealer who has a lower price. A car dealer gets “just one chance” to sell you a car when he puts his price out on the Internet. The Internet is theoretically the purest and best form of a competitive marketplace, favoring the buyer. Think about it…if you wanted to take the time you could get a price quote from every Honda, Toyota, or Ford dealer in the USA! There are about 1,300 Toyota dealers in the USA. It might take you a while (about 8 days if you worked 8 hours a day and spent 3 minutes per email), but you sure would know who was selling your selected model Toyota for the lowest price.
Whether you are reading newspaper ads, watching TV ads, reading direct mail advertising, or surfing car a dealer’s Web site you have to be careful of deception. Internet advertising on car dealer’s Web sites and their Internet price quotes can be more deceptive than other media. This is because the Internet is the “new frontier”. Legislation has not caught up with the Internet like it has newspaper, TV, and radio advertising. A dealer can get away with a lot more on his Web site and price quotes than he can in a newspaper ad. Electronic media and newspaper advertising are also a lot more visible to the regulators than the Internet.
I’ll give you an example of the type of violation you must be wary of. There’s a car dealer in West Palm Beach who quotes prices to his customers over the Internet excluding $699.95 for a “dealer fee” plus $199.95 for a “doc fee”. This totals $899.90 in a surprise price increase when you come into the dealership to pick up your car. The written warning you have is an asterisk denoting some fine print at the bottom of the Internet quote that says *plus tax, tag, and fees. The “fees” mean $899 in additional price and profit to the dealer on top of the price you were quoted. As if this practice isn’t bad enough, many people come in, sign the papers, and drive their new car home without even realizing that they paid an extra $899.90 because it is hidden in the voluminous paperwork that you sign rapidly in the dealer’s finance office.
Your defense against this sort of thing is to call those dealers who have given you the lowest price quotes on the vehicle you want to buy. Start with the lowest price and simply ask, “Is there anything else added to my price other than Florida sales tax and a state fee for a license tag or tag transfer?” If they do add something, find out specifically what they do add so that you know you have an “out-the-door”, bottom line price when you come in to take delivery. If they won’t give you a clear answer or are ambiguous, hang up and call the next dealer.
Dealers who advertise deceptively have the philosophy that all that counts with their advertising is to “get them in the door”. Another slang dealers use for this is “driving floor traffic”. They calculate that if they can trick enough people to come through the door, they will be able to fool a certain percentage of them. It’s like Abraham Lincoln said, “You may fool all the people some of the time, you can even fool some of the people all of the time, but you cannot fool all of the people all of the time.” Well these dealers don’t have to fool all of the people to make lots of money. All they have to do is fool some of the people all of the time and that’s exactly what their advertising is designed to do. Don’t be one of those who are fooled.
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