Monday, March 28, 2011
Emotion Is Your Enemy When Buying a Car
It’s hard to believe, but a high percentage of people will buy a new or used car on the first day they go car shopping. Many buyers never even compare prices with other dealers or research the car for safety, fuel economy, reliability, maintenance costs or resale value. If you’re a reader of this blog/column, you know that the car purchase process should take weeks. You must not only choose the best car to meet your needs, but you must choose the best price by getting at least three competitive quotes. The best price must include your trade-in and your financing interest rate. Since the terrible tragedy befalling Japan, tsunami-earthquake-nuclear reactor damage, panic buying of Japanese cars has been ignited. People are frightened that that new Honda, Nissan, Mazda, or Toyota they’ve been thinking about buying won’t be available if they don’t rush out and buy it today. Nothing could be further from the truth. In the first place, most Japanese brands that are bought in the USA are also built in North America and countries other than Japan. Parts for these cars are also mainly manufactured here. Of course there will be interruptions and slower production of a few models such as the Honda Fit and the Toyota Prius, but these will be only temporary. If there’s a shortage of the specific model you want to buy, wait a few weeks and there will be larger inventories and selections than ever before! Why? Japan’s economy and consumers have suffered a terrible economic blow. When manufacturing is reestablished and parts are full available again, there will be virtually no domestic buyers and Japan can only export what they make. Waiting to buy that Japanese car that is in short supply for a few weeks can save you thousands of dollars. Did you know that emotion can be the car dealer’s enemy sometimes and this can work to your benefit? There are two forces that have the net effect of driving car dealers and their salesmen and managers into an emotional frenzy. One is the “end of the month” and the other is the “stair-step incentive system”. It might sound like an old wives tale or an urban legend to be debunked by Snopes, but car dealers do sell cars for less at the end of a month. This is for a variety of reasons: (1) Dealers and manufacturers concentrate their advertising of sales and specials in the 2nd half of the month. (2) Manufacturers’ and dealers’ rebates and incentives typically expire at the end of the month. (3) Salesmen and sales managers are usually paid bonuses which culminate at the end of the month. Salesmen are paid volume bonuses and just one car sale can mean $1,000 or more on the last day of the month. (4) Manufacturers “live for market share” and sales numbers are widely publicized at the end of each month. Ford wants to outsell GM, Honda wants to outsell Toyota, etc. Stair step incentives are the most popular way that manufacturers motivate their dealers to sell more cars. An example would be a dealer earning $500 for each car he sold in a given month, but not until he sold the number of cars in his objective that was set by the manufacturer…say 250 cars. If the dealer sells 249 cars in the month, he earns zero incentive money. If he sells 250, he earns $125,000! Now, I think you can understand why you, a customer for that 250th car at midnight on the last day of the month might be able to negotiate a pretty good price. In fact, it would actually pay the dealer to “give’ you the car. Of course, it isn’t only the 250th buyer, but all buyers that the dealer believes may help him hit his objective. At the beginning of the month, it’s too soon to know if a particular sale will be the pivotal one. You’re probably reading this article close to the beginning of April. This gives you 3 or 4 weeks before the end of the month to do your homework and choose the right car. You have plenty of time to get three prices on the car you want to buy as well as on your trade-in and financing. Now, the fun part is to wait until the last day of the month and visit the dealer who gave you the lowest price earlier in the month. There’s a very good chance that you can negotiate a better price by hundreds if not thousands of dollars. Your emotion is the enemy when you buy a car, but the dealer’s emotion can be your friend.
Monday, March 14, 2011
The Media and the Tragedy in Japan
There they go again! Déjà vu from the BP oil spill (anybody seen an oil slick lately?) and the Toyota “sudden acceleration” recalls (Did you read that Toyota was exonerated and the cause was driver error?).
The earthquake and subsequent tsunami in Japan last week were, unquestionably, a terrible tragedy. The Japanese Prime Minister said it was the worst crisis to beset Japan since WWII. Certainly, that statement is a fact – not since its near destruction has a greater disaster befallen Japan. I was born in 1940 and I have a vivid recollection of how Japan literally rose, over the years, from the ashes of complete devastation topped off by the Hiroshima and Nagasaki nuclear blasts. There are no more resilient, resourceful or intelligent people on the Planet than the Japanese. They will be back, better than ever, far sooner than anybody expects.
This column/blog is named “Earl Stewart on Cars” and I’m a Toyota dealer. So, forgive me if I focus more on the impact on Japanese auto manufacturing. Other aspects of this tragedy will be addressed by other writers, but I will address the business aspect and the car business aspect in particular. I will not be the first; many newspapers and web sites, including the Wall Street Journal and the New York Times have done so already.
I’ll start the discussion with the model car that Japan exports more of to the USA than any other, the Toyota Prius. There was absolutely no damage to the Prius plant from either the tsunami or the earthquake. Furthermore, thanks to the Japanese “just in time” parts supply manufacturing process; virtually all of the Prius’ suppliers lie safely and closely to the Prius plant.
The Prius plant and most other auto manufacturing plants were closed right after the earthquake and tsunami but most all of them are scheduled to open on March 16. There have been concerns expressed about transporting cars to the ports because of possible damage to the ports, railroads and highways. My view is that a Japanese manufacturer wouldn’t announce that they were commencing production on March 16th unless they knew they could get the cars to the port. Japan auto manufacturers won’t be building cars for domestic consumption for quite a few months due to the blow to their economy and the domestic consumer. They have only one choice which is to export. Prius is the largest selling car in Japan. With domestic consumption at a virtual standstill, the USA and the rest of the world can expect to receive record volume shipments of Priuses.
The media would have you believe that the supply of Japanese produced cars will dry up overnight, but the exact opposite is most likely to occur. That’s not to say that Priuses are going to be in large supply in the next few weeks or months. But this is due to high gas prices and the crisis in Libya, Egypt, and maybe even Saudi Arabia. All hybrids and fuel efficient cars are in short supply now. Ironically, the Japan crisis will work to increase supplies and lower prices as more cars are exported to the USA from Japan.
Lastly, although the Japan-bashers hate to admit it, even if Japan never exported one more car to the USA, it wouldn’t be a big obstacle for most Japanese car makers, especially Toyota. Most Japanese car brands build most of their cars sold in the USA in North America and use domestic parts suppliers. The average Toyota has more parts built in the USA than any other car sold in America including the Ford F-150. The Toyota Camry is the “most American car” you can buy. When you hear these redneck bigots making disparaging remarks about the Japanese and extorting their dimwitted friends to “buy American” made trucks and cars, they are really saying buy a Toyota Tundra not a Ford F-150 or a Toyota Camry not a Chevrolet Malibu.
The earthquake and subsequent tsunami in Japan last week were, unquestionably, a terrible tragedy. The Japanese Prime Minister said it was the worst crisis to beset Japan since WWII. Certainly, that statement is a fact – not since its near destruction has a greater disaster befallen Japan. I was born in 1940 and I have a vivid recollection of how Japan literally rose, over the years, from the ashes of complete devastation topped off by the Hiroshima and Nagasaki nuclear blasts. There are no more resilient, resourceful or intelligent people on the Planet than the Japanese. They will be back, better than ever, far sooner than anybody expects.
This column/blog is named “Earl Stewart on Cars” and I’m a Toyota dealer. So, forgive me if I focus more on the impact on Japanese auto manufacturing. Other aspects of this tragedy will be addressed by other writers, but I will address the business aspect and the car business aspect in particular. I will not be the first; many newspapers and web sites, including the Wall Street Journal and the New York Times have done so already.
I’ll start the discussion with the model car that Japan exports more of to the USA than any other, the Toyota Prius. There was absolutely no damage to the Prius plant from either the tsunami or the earthquake. Furthermore, thanks to the Japanese “just in time” parts supply manufacturing process; virtually all of the Prius’ suppliers lie safely and closely to the Prius plant.
The Prius plant and most other auto manufacturing plants were closed right after the earthquake and tsunami but most all of them are scheduled to open on March 16. There have been concerns expressed about transporting cars to the ports because of possible damage to the ports, railroads and highways. My view is that a Japanese manufacturer wouldn’t announce that they were commencing production on March 16th unless they knew they could get the cars to the port. Japan auto manufacturers won’t be building cars for domestic consumption for quite a few months due to the blow to their economy and the domestic consumer. They have only one choice which is to export. Prius is the largest selling car in Japan. With domestic consumption at a virtual standstill, the USA and the rest of the world can expect to receive record volume shipments of Priuses.
The media would have you believe that the supply of Japanese produced cars will dry up overnight, but the exact opposite is most likely to occur. That’s not to say that Priuses are going to be in large supply in the next few weeks or months. But this is due to high gas prices and the crisis in Libya, Egypt, and maybe even Saudi Arabia. All hybrids and fuel efficient cars are in short supply now. Ironically, the Japan crisis will work to increase supplies and lower prices as more cars are exported to the USA from Japan.
Lastly, although the Japan-bashers hate to admit it, even if Japan never exported one more car to the USA, it wouldn’t be a big obstacle for most Japanese car makers, especially Toyota. Most Japanese car brands build most of their cars sold in the USA in North America and use domestic parts suppliers. The average Toyota has more parts built in the USA than any other car sold in America including the Ford F-150. The Toyota Camry is the “most American car” you can buy. When you hear these redneck bigots making disparaging remarks about the Japanese and extorting their dimwitted friends to “buy American” made trucks and cars, they are really saying buy a Toyota Tundra not a Ford F-150 or a Toyota Camry not a Chevrolet Malibu.
Monday, March 07, 2011
Florida’s Orwellian Attack on the Elderly
I couldn’t believe the article I read in last Sunday’s Sun Sentinel (March 5, 2011) reporting that Florida took away the driver’s licenses of 7,719 residents based on 9,105 anonymous accusers!
This is the result of a Florida policy allowing anybody to notify the state if they believe a person is mentally or physically incapable of safely driving their vehicle. The informant can obtain a form from the Florida Department of Highway Safety and Motor Vehicles or download the form from the Internet. The informant is anonymous and is not required to have proof that there is anything causing the driver they are turning in to drive unsafely. Not only does the informant remain anonymous, but should the victim of the informant feel or even prove that that the report was made carelessly or maliciously, “no civil or criminal action may be brought against any person who provides the information.”
Once the informant has made his report, investigators who work for the state make contact with the driver and submit their findings to a medical review section in Tallahassee. Investigators may interview family members, neighbors, or the driver’s physician as part of the investigation. The drive may be asked to submit a medical report from their physician or they may be required to report to a driver license office for retesting. How much confidence do you have in state investigators? I know that the ones who investigate children abused in foster homes haven’t been doing too good a job lately.
What this all means is that, if you don’t like the way somebody drives or even if you just don’t like somebody period, you can turn them in to the state and hope that their driver’s license is revoked. Almost 9 times out of 10, driver’s licenses are revoked on the basis of these reports so the odds are pretty good for the informants. But even if the driver’s license isn’t revoked, think of the aggravation, embarrassment and time consumed by these drivers to fight to keep their licenses. Clearly, most of those reports are made against the elderly and the elderly are often more vulnerable and less equipped to do battle with the state or he accuser.
Have you ever been driving and gotten angry because the driver in front of you was going too slowly? Maybe you’re late for something and the drivers in the left and right lanes won’t get out of your way. This can make anybody angry to the point where you might curse, blow your horn or flash your lights. I’m sure that many cases of violent road rage start with this scenario.
It’s very easy to obtain a person’s name and address once you know their license tag number. I wonder how many reports are made to Florida’s Department of Highway Safety and Motor Vehicles as a result of angry drivers in a hurry. You don’t even have to be angry at a person’s driving to report them. You might just have had an argument and decided this is a great, completely safe way to get even without the other person ever finding out.
I completely understand that we have lots of impaired drivers who shouldn’t be on the road. That’s why we require that drivers take driving tests periodically. I would fully support requiring older drivers to take more frequent hearing, vision, and driving tests. But I can’t believe that we have a system allowing anybody to anonymously inform on another with no responsibility or recourse. If a person has reasonable evidence to think another driver is impaired to the point he can’t drive safely, he should report him, but not anonymously. Everybody should have the right to face his accuser. The accused should also have the right to sue or prosecute the accuser if it can be proven the accusation was made carelessly or maliciously.
If you agree with me, contact your local state senator and representative and let them know how you feel about this Orwellian assault on Florida’s elderly drivers.
This is the result of a Florida policy allowing anybody to notify the state if they believe a person is mentally or physically incapable of safely driving their vehicle. The informant can obtain a form from the Florida Department of Highway Safety and Motor Vehicles or download the form from the Internet. The informant is anonymous and is not required to have proof that there is anything causing the driver they are turning in to drive unsafely. Not only does the informant remain anonymous, but should the victim of the informant feel or even prove that that the report was made carelessly or maliciously, “no civil or criminal action may be brought against any person who provides the information.”
Once the informant has made his report, investigators who work for the state make contact with the driver and submit their findings to a medical review section in Tallahassee. Investigators may interview family members, neighbors, or the driver’s physician as part of the investigation. The drive may be asked to submit a medical report from their physician or they may be required to report to a driver license office for retesting. How much confidence do you have in state investigators? I know that the ones who investigate children abused in foster homes haven’t been doing too good a job lately.
What this all means is that, if you don’t like the way somebody drives or even if you just don’t like somebody period, you can turn them in to the state and hope that their driver’s license is revoked. Almost 9 times out of 10, driver’s licenses are revoked on the basis of these reports so the odds are pretty good for the informants. But even if the driver’s license isn’t revoked, think of the aggravation, embarrassment and time consumed by these drivers to fight to keep their licenses. Clearly, most of those reports are made against the elderly and the elderly are often more vulnerable and less equipped to do battle with the state or he accuser.
Have you ever been driving and gotten angry because the driver in front of you was going too slowly? Maybe you’re late for something and the drivers in the left and right lanes won’t get out of your way. This can make anybody angry to the point where you might curse, blow your horn or flash your lights. I’m sure that many cases of violent road rage start with this scenario.
It’s very easy to obtain a person’s name and address once you know their license tag number. I wonder how many reports are made to Florida’s Department of Highway Safety and Motor Vehicles as a result of angry drivers in a hurry. You don’t even have to be angry at a person’s driving to report them. You might just have had an argument and decided this is a great, completely safe way to get even without the other person ever finding out.
I completely understand that we have lots of impaired drivers who shouldn’t be on the road. That’s why we require that drivers take driving tests periodically. I would fully support requiring older drivers to take more frequent hearing, vision, and driving tests. But I can’t believe that we have a system allowing anybody to anonymously inform on another with no responsibility or recourse. If a person has reasonable evidence to think another driver is impaired to the point he can’t drive safely, he should report him, but not anonymously. Everybody should have the right to face his accuser. The accused should also have the right to sue or prosecute the accuser if it can be proven the accusation was made carelessly or maliciously.
If you agree with me, contact your local state senator and representative and let them know how you feel about this Orwellian assault on Florida’s elderly drivers.
Monday, February 28, 2011
The Fine Print in a Car Ad
There ought to be a law against advertising any product, especially cars, while concealing information in the fine print which completely negates the material facts advertised in the bold print, especially price.
Electronic media ads are the worst offenders. The way the fine print disclosure is shown on TV is a joke. It’s literally impossible to read the fine print due to the blurred, small size and the very short length of the time it’s displayed. Radio “fine print” is equally ludicrous. It’s often read at high speed like an “auctioneer on amphetamines”, at a very low volume, and often at the beginning of the commercial so that listeners don’t even know that it’s part of the advertisement.
What do our lawmakers and regulators think when they see these TV ads and listen to the radio ads? The lawmakers either don’t care that misleading ads are routinely deceiving the public or they’ve been paid off by industry lobbyist to look the other way.
For purposes of this article, I had to choose a print ad because, like you, I can’t decipher the fine print in radio or TV ads. I chose this ad at random from lots of car dealer ads in the Palm Beach Post and the Fort Lauderdale Sun Sentinel on Saturday, February 26. This particular ad ran in both of these newspapers. It’s not the most deceptive ad, not the least…just a typical South Florida newspaper car ad with important facts hidden from the reader by putting them in the fine print. You can view the ad for yourself by clicking on www.AnatomyOfACarAd.com. You will see the ad as a whole and a blow-up of the fine print so that you can read it. What follows is an explanation of how the fine print would affect your decision to purchase if you were to read and understand what you read.
(1) Prices plus tax, tag, title, dealer installed options. All of the advertised prices are understated by accessories (options) that the dealer has chosen to add to the advertised car. These are typically low cost items to the dealer that are marked up to you, the customer by a HUGE margin. Examples are pin stripes, nitrogen in tires, glass etch, window tint, door edge guards, “protection packages”, paint sealant, fabric protections, road hazard assistance, etc. A typical markup from dealer installed options would cost the dealer under $100 and be priced to you well over $1,000.
(2) All rebates applied including owner loyalty, lease loyalty, & military rebates. Customer must qualify for all rebates & incentives. Dealer retains all rebates & incentives. The dealer keeps all rebates, even those you might have seen advertised by the manufacturer. You have to sign a form before purchase that assigns your rebates to the dealer. But the worst part of this is the assumption that you qualify for “owner loyalty”, “lease loyalty”, and “military” rebates. Loyalty rebates mean that you have to have purchased or leased that make car and trade it in to qualify. The odds are you drive another make. The military rebate is especially outrageous. It often amounts to $1,000 and only applies if you are currently on active duty in the US military. In other words, the prices that you read in this ad are understated by thousands of dollars in rebates that you very likely will not qualify for.
(3) All vehicles subject to prior sale. Must present ad at time of purchase to receive advertised offer. Offer expires date of publication. Notice in the main part of the ad, each advertised car has a number next to it. One example is STK#110272. This number is the stock number of one particular car and that is the only car available at that price. If the dealer tells you that car was “sold”, he’s not obligated to sell an identical car at the same price even if he has several. If he does sell you an identical car, he can now add his dealer fee. If you buy a car today and see it advertised for less tonight…that’s too bad. If you came in the next day on the ad, that’s too bad too.
(4) Dealer not responsible for typographical errors or omissions. Vehicle art for illustration only. Optional equipment or varying model may be shown. This essentially says that you cannot hold the dealer to anything you read or see pictured in the advertisement. He can say that the price was a “mistake” and that the truck with the luxury wheels and sunroof was “for illustrative purposes only”.
(5) Offers not in conjunction. Other restrictions apply. See dealer for complete details. If the dealer advertised 0% financing and no down payment, you can’t get both. “Other restrictions” means that just in case the dealer didn’t cover everything in the fine print there may be “other restrictions” that he can bring up later. When you come in to buy that new car or truck, he’ll give you those details.
(6) We will beat any local, valid, printed advertisement from another authorized Dodge, Chrysler, or Jeep dealer within the SE Business Center Zone on any new identically equipped in stock vehicle. If we fail to beat the price we will give you $1,000. Customer must present competitors ad at the time of purchase and supply accurate VIN number, competitor’s ad must be dated same day as the customers purchase excluding tax, tag, title, dealer-installed options. If we beat the competitor’s price you must buy the vehicle from Arrigo. Dealer reserves the right to purchase the vehicle from other dealer. The price guarantee doesn’t apply to “dealer installed options” which represent thousand(s) of dollars in profit to the dealer. The dealer reserves the right to purchase the exact car from his competitor. There’s zero chance that his competitor will sell him that car, lose the sale and give it to his competition.
(7) $3,000 cash or trade equity due at signing. This means that the price or lease payment you came in on requires you to give the dealer $3,000.
(8) Qualified Customers with a minimum 750 credit score. Most people don’t have that good a credit score and will be asked to make higher payments and/or put down a larger down payment.
The bottom line is that you should never buy a car in response to an advertisement. The deck is stacked against you and you can’t win the game. The only way to get a good price on a new or used car is to first decide on the exact year, make, and model and which options you want and compare prices with at least three dealers. Do the same for your trade in and for your financing.
Electronic media ads are the worst offenders. The way the fine print disclosure is shown on TV is a joke. It’s literally impossible to read the fine print due to the blurred, small size and the very short length of the time it’s displayed. Radio “fine print” is equally ludicrous. It’s often read at high speed like an “auctioneer on amphetamines”, at a very low volume, and often at the beginning of the commercial so that listeners don’t even know that it’s part of the advertisement.
What do our lawmakers and regulators think when they see these TV ads and listen to the radio ads? The lawmakers either don’t care that misleading ads are routinely deceiving the public or they’ve been paid off by industry lobbyist to look the other way.
For purposes of this article, I had to choose a print ad because, like you, I can’t decipher the fine print in radio or TV ads. I chose this ad at random from lots of car dealer ads in the Palm Beach Post and the Fort Lauderdale Sun Sentinel on Saturday, February 26. This particular ad ran in both of these newspapers. It’s not the most deceptive ad, not the least…just a typical South Florida newspaper car ad with important facts hidden from the reader by putting them in the fine print. You can view the ad for yourself by clicking on www.AnatomyOfACarAd.com. You will see the ad as a whole and a blow-up of the fine print so that you can read it. What follows is an explanation of how the fine print would affect your decision to purchase if you were to read and understand what you read.
(1) Prices plus tax, tag, title, dealer installed options. All of the advertised prices are understated by accessories (options) that the dealer has chosen to add to the advertised car. These are typically low cost items to the dealer that are marked up to you, the customer by a HUGE margin. Examples are pin stripes, nitrogen in tires, glass etch, window tint, door edge guards, “protection packages”, paint sealant, fabric protections, road hazard assistance, etc. A typical markup from dealer installed options would cost the dealer under $100 and be priced to you well over $1,000.
(2) All rebates applied including owner loyalty, lease loyalty, & military rebates. Customer must qualify for all rebates & incentives. Dealer retains all rebates & incentives. The dealer keeps all rebates, even those you might have seen advertised by the manufacturer. You have to sign a form before purchase that assigns your rebates to the dealer. But the worst part of this is the assumption that you qualify for “owner loyalty”, “lease loyalty”, and “military” rebates. Loyalty rebates mean that you have to have purchased or leased that make car and trade it in to qualify. The odds are you drive another make. The military rebate is especially outrageous. It often amounts to $1,000 and only applies if you are currently on active duty in the US military. In other words, the prices that you read in this ad are understated by thousands of dollars in rebates that you very likely will not qualify for.
(3) All vehicles subject to prior sale. Must present ad at time of purchase to receive advertised offer. Offer expires date of publication. Notice in the main part of the ad, each advertised car has a number next to it. One example is STK#110272. This number is the stock number of one particular car and that is the only car available at that price. If the dealer tells you that car was “sold”, he’s not obligated to sell an identical car at the same price even if he has several. If he does sell you an identical car, he can now add his dealer fee. If you buy a car today and see it advertised for less tonight…that’s too bad. If you came in the next day on the ad, that’s too bad too.
(4) Dealer not responsible for typographical errors or omissions. Vehicle art for illustration only. Optional equipment or varying model may be shown. This essentially says that you cannot hold the dealer to anything you read or see pictured in the advertisement. He can say that the price was a “mistake” and that the truck with the luxury wheels and sunroof was “for illustrative purposes only”.
(5) Offers not in conjunction. Other restrictions apply. See dealer for complete details. If the dealer advertised 0% financing and no down payment, you can’t get both. “Other restrictions” means that just in case the dealer didn’t cover everything in the fine print there may be “other restrictions” that he can bring up later. When you come in to buy that new car or truck, he’ll give you those details.
(6) We will beat any local, valid, printed advertisement from another authorized Dodge, Chrysler, or Jeep dealer within the SE Business Center Zone on any new identically equipped in stock vehicle. If we fail to beat the price we will give you $1,000. Customer must present competitors ad at the time of purchase and supply accurate VIN number, competitor’s ad must be dated same day as the customers purchase excluding tax, tag, title, dealer-installed options. If we beat the competitor’s price you must buy the vehicle from Arrigo. Dealer reserves the right to purchase the vehicle from other dealer. The price guarantee doesn’t apply to “dealer installed options” which represent thousand(s) of dollars in profit to the dealer. The dealer reserves the right to purchase the exact car from his competitor. There’s zero chance that his competitor will sell him that car, lose the sale and give it to his competition.
(7) $3,000 cash or trade equity due at signing. This means that the price or lease payment you came in on requires you to give the dealer $3,000.
(8) Qualified Customers with a minimum 750 credit score. Most people don’t have that good a credit score and will be asked to make higher payments and/or put down a larger down payment.
The bottom line is that you should never buy a car in response to an advertisement. The deck is stacked against you and you can’t win the game. The only way to get a good price on a new or used car is to first decide on the exact year, make, and model and which options you want and compare prices with at least three dealers. Do the same for your trade in and for your financing.
Monday, February 21, 2011
Make “Black Box” Data Recorders Mandatory on All Vehicles
Regular readers of this column and blog may be shocked to read about my advocating government intervention regarding equipment on new cars. I’ve come out against silly proposed government suggestions like installing a “noise maker” in hybrid vehicles so that they can be heard when running on batteries. I’m also against a device that will prevent your car from starting if your cell phone is turned on. I don’t even like the check engine light which is mandated by law to be sure your car isn’t leaking too many pollutants.
However, I’m totally in favor of requiring all auto manufacturers to install EDR’s (electronic data recorders) in all vehicles. Interestingly enough, many manufacturers have been doing this for a lot of years, but they kept it a “secret”. I can remember customers calling me to ask if there was an EDR in their Toyota. At first, I said no because Toyota had never told their dealers anything about this. When word finally leaked out, I learned that this EDR was for internal use only and in fact Toyota and the other manufacturers encrypted the data so that, if somebody found the black box, they couldn’t translate the information.
Why would manufacturers keep an EDR secret from their customers, the government, and everybody else? The answer is fear of litigation. Plaintiffs’ lawyers could use this information against the manufacturer in product liability claims and lawyers could also sue manufacturers for violation of their privacy rights.
I have no sympathy for a manufacturer who is afraid of the truth. If the EDR proves that there was a defect that caused the accident, so be it. The manufacturer is guilty and should pay damages. The unacceptable alternative is to not learn or hide the truth. What’s even worse is that the known cause of the accident may not be corrected so that future cars won’t have the same problem.
I also have no sympathy for privacy advocates who say “It’s my car and the black box belongs to me. I can determine who looks at the black box.” It might be your car, but the government can tell you how fast you can drive without imperiling the lives of others. They should also be able to find out to a certainty whether speeding or driver error caused you to injure or kill another person(s).
A fringe benefit of EDR’s would be a huge savings in the costs of litigation and insurance. A black box is like DNA in that the evidence is indisputable. I wonder if one of the reasons the black box is being stonewalled is the resistance of lawyers.
The National Highway Transportation Safety Association (NHTSA) issued regulations in 2006 regarding an EDR but without making it mandatory. In other words, the manufacturers can take it or leave it. This is nonsensical. What good is rule if you don’t enforce it? What could be more important than a device that will scientifically determine the cause of an accident…whether the accident was caused by driver error, vehicle defects, or highway design flaws? Who can possibly be against this? They estimate that the cost to the manufacturer would be only about 50 cents!
The EDR, black box, has been mandatory in airplanes for many years. Thousands of lives have been saved as a result of being able to determine the causes of airline accidents and instituting remedies in the form of design changes and improved training and safety regulations for flight crews. If we had had black boxes in cars as long as airplanes, the number of deaths and injuries prevented would be many times greater than that in airplanes simply because of the larger number of people who drive than fly and the greater number of accidents.
Ironically, the highly publicized recalls of millions of Toyotas worldwide, may have awakened the car manufacturers and the government to the necessity of EDR’s. One of the things that proved the innocence of Toyota against the charges of vehicle defects causing “sudden acceleration” was Electronic Data Recorders that were furnished to NHTSA and deciphered by Toyota. All of the EDR evidence proved that the accidents caused from the alleged sudden acceleration were driver error. Drivers either accidentally stepped on the accelerator instead of the brake or had the wrong floor mats placed incorrectly (sometimes two sets stacked on top of each other) in their vehicles.
Hopefully all manufacturers and our government will get the idea. That idea is the one our mothers taught us when we were children…honesty is the best policy” and as Dr. Martin Luther King often quoted, “The truth shall set you free”.
Monday, February 14, 2011
Ray LaHood, The Media & Congress Owe Toyota an Apology
You may have seen it on TV or maybe even a newspaper that Toyota was exonerated from safety concerns about their electronic throttle controls. I say “may” have seen it because the media downplayed this just as badly as they hyped the lies about Toyota having unsafe cars.
The National Highway Traffic Safety Association (NHTSA) commissioned NASA to study whether or not any sudden acceleration problems could be caused by the electronic throttle control systems in Toyotas. This is the same system that most other manufacturers now use. Our nation’s top scientists studied this possibility for 10 months and concluded this month that there are no defects and Toyotas are perfectly safe to drive.
The conclusion is that most of those cases of “sudden acceleration” were the fault of the drivers, not Toyota, and the rest of them were lawyers and car owners trying to make a fast buck by suing Toyota. In the vast majority of the accidents, the driver mistakenly stepped on the accelerator thinking it was the brake. This sort of thing happens every day, especially in south Florida where a lot of elderly people who shouldn’t drive do. Other “sudden acceleration” accidents were caused by customer or dealers accidentally using the wrong floor mats in cars or stacking more than one set of floor mats on top of the other. The terrible case of the highway patrolman’s family killed driving a Lexus in Texas was the fault of the wrong floor mats. The media jumped all over this one even though it was proven that the dealer incorrectly installed truck all-weather floor mats “upside down” in this Lexus. These were the only deaths caused by any alleged sudden acceleration event.
Toyota, Toyota dealers and their employees, and Toyota customers have suffered financially and emotionally from the irresponsible acts and suspect motivations of Ray LaHood, the chairman of NHTSA, the Congress, and the media. Ray LaHood, on national TV, actually told all Toyota owners to pull their Toyotas over to the side of the road, get out of the car, and don’t drive it again. I can still remember the panic of my customers in my dealership on that day. The phones were ringing off the hooks and some of my customers were literally in tears.
Toyota had to recall millions of Toyotas at a cost of hundreds of millions of dollars. Millions of Toyota owners were fearful of their “lives”, even being afraid to drive their cars to the dealerships to have them “fixed”. For my customers who were terrified to drive their cars, I sent my technicians to their homes or brought them a free loaner car and took their car back to my dealership. Even after the cars were “fixed”, owners were fearful of driving them because of the pure speculation that there might be something wrong with the electronic throttle control too.
Every time someone claimed their Toyota had accelerated out of control, the media headlined and featured the accusation but when the allegation was proven fraudulent or mistaken, they failed to mention this at all or buried it on the back pages.
Congress dragged the president of Toyota USA , Jim Lentz, and the chairman of the board of Toyota, Akio Toyoda, in front of the TV cameras and utterly humiliated them. The worst of these political hacks were the Congressmen from the Detroit, Michigan districts, Bart Stupak, and John Dingell. There hidden agenda was clearly to build up GM, Chrysler, and Ford by tearing down Toyota.
Toyota had no choice but to apologize and confess to a crime they didn’t commit. It would have been suicidal for Toyota to blame their customers for the problems of sudden acceleration. This would have whipped Ray LaHood, Congress, and the media into an even greater feeding frenzy and may have even brought down Toyota as big and powerful as they are.
Toyota’s false confession is analogous to the large number of false confessions by accused criminals. Many innocent men and women confess every day to crimes they didn’t commit. The police interrogators make it sound as if they have no alternative. They tell the accused that they have more than sufficient evidence to convict. They go on to say that they can get the judge to go easy on them if they confess and save the taxpayers the cost of a trial. Sometime they promise no jail time and probation, but a very severe sentence of they don’t sign a false confession. This occurrence is so common, that courts have held that a confession by itself is not sufficient to convict. There must be enough evidence to substantiate the confession. The famous novelist, John Gresham, just wrote a book on this very topic, Confession, which is on the NY Times best seller list.
I’m not deluding myself to expect that Ray LaHood, Congress, or the media would ever do the right thing and publically apologize to Toyota. Admitting you’re wrong and sincerely apologizing takes class…and as the old Frank Sinatra song, “Style”, goes…”You either got or you haven’t got class”.
The National Highway Traffic Safety Association (NHTSA) commissioned NASA to study whether or not any sudden acceleration problems could be caused by the electronic throttle control systems in Toyotas. This is the same system that most other manufacturers now use. Our nation’s top scientists studied this possibility for 10 months and concluded this month that there are no defects and Toyotas are perfectly safe to drive.
The conclusion is that most of those cases of “sudden acceleration” were the fault of the drivers, not Toyota, and the rest of them were lawyers and car owners trying to make a fast buck by suing Toyota. In the vast majority of the accidents, the driver mistakenly stepped on the accelerator thinking it was the brake. This sort of thing happens every day, especially in south Florida where a lot of elderly people who shouldn’t drive do. Other “sudden acceleration” accidents were caused by customer or dealers accidentally using the wrong floor mats in cars or stacking more than one set of floor mats on top of the other. The terrible case of the highway patrolman’s family killed driving a Lexus in Texas was the fault of the wrong floor mats. The media jumped all over this one even though it was proven that the dealer incorrectly installed truck all-weather floor mats “upside down” in this Lexus. These were the only deaths caused by any alleged sudden acceleration event.
Toyota, Toyota dealers and their employees, and Toyota customers have suffered financially and emotionally from the irresponsible acts and suspect motivations of Ray LaHood, the chairman of NHTSA, the Congress, and the media. Ray LaHood, on national TV, actually told all Toyota owners to pull their Toyotas over to the side of the road, get out of the car, and don’t drive it again. I can still remember the panic of my customers in my dealership on that day. The phones were ringing off the hooks and some of my customers were literally in tears.
Toyota had to recall millions of Toyotas at a cost of hundreds of millions of dollars. Millions of Toyota owners were fearful of their “lives”, even being afraid to drive their cars to the dealerships to have them “fixed”. For my customers who were terrified to drive their cars, I sent my technicians to their homes or brought them a free loaner car and took their car back to my dealership. Even after the cars were “fixed”, owners were fearful of driving them because of the pure speculation that there might be something wrong with the electronic throttle control too.
Every time someone claimed their Toyota had accelerated out of control, the media headlined and featured the accusation but when the allegation was proven fraudulent or mistaken, they failed to mention this at all or buried it on the back pages.
Congress dragged the president of Toyota USA , Jim Lentz, and the chairman of the board of Toyota, Akio Toyoda, in front of the TV cameras and utterly humiliated them. The worst of these political hacks were the Congressmen from the Detroit, Michigan districts, Bart Stupak, and John Dingell. There hidden agenda was clearly to build up GM, Chrysler, and Ford by tearing down Toyota.
Toyota had no choice but to apologize and confess to a crime they didn’t commit. It would have been suicidal for Toyota to blame their customers for the problems of sudden acceleration. This would have whipped Ray LaHood, Congress, and the media into an even greater feeding frenzy and may have even brought down Toyota as big and powerful as they are.
Toyota’s false confession is analogous to the large number of false confessions by accused criminals. Many innocent men and women confess every day to crimes they didn’t commit. The police interrogators make it sound as if they have no alternative. They tell the accused that they have more than sufficient evidence to convict. They go on to say that they can get the judge to go easy on them if they confess and save the taxpayers the cost of a trial. Sometime they promise no jail time and probation, but a very severe sentence of they don’t sign a false confession. This occurrence is so common, that courts have held that a confession by itself is not sufficient to convict. There must be enough evidence to substantiate the confession. The famous novelist, John Gresham, just wrote a book on this very topic, Confession, which is on the NY Times best seller list.
I’m not deluding myself to expect that Ray LaHood, Congress, or the media would ever do the right thing and publically apologize to Toyota. Admitting you’re wrong and sincerely apologizing takes class…and as the old Frank Sinatra song, “Style”, goes…”You either got or you haven’t got class”.
Tuesday, February 08, 2011
Mega Car Dealer Counter Attacks Palm Beach Post
My weekly column/blog is usually devoted to advice and opinion but sometimes I have to report the news, especially when nobody else will.
Three Sundays ago, one of the larger car dealers in Palm Beach County, Ed Napleton, was arrested for DUI and jailed overnight. Napleton has several car dealerships in Palm Beach County, including Nissan, Hyundai, Kia, Chrysler-Dodge-Jeep, and Lincoln Mercury. Now, this isn’t the news I feel compelled to report because I don’t really consider this sort of personal tragedy news. What I do feel is newsworthy is that the Palm Beach Post did report it in their newspaper and website and in tabloid-like juicy detail. You can read their web posting at PBPostNapletonDUI and see if you agree.
They say that celebrities like Charlie Sheen, are fair game for this sort thing, but a local businessman who never even appeared on TV or had his picture in the paper?
What clinched the news worthiness of this column was the fact that Ed Napleton has retaliated against the PB Post by cancelling all of his advertising. This doesn’t sound very interesting unless you understand that Ed Napleton spends very large sums of money advertising in the Post and is their largest car dealer advertiser. In fact, he may be their largest advertiser period.
As you know, newspapers have seen better economic times. In fact, over the past several years many newspapers have closed up shop, many have declared bankruptcy, and most others are teetering on bankruptcy. The PB Post has been “hanging by a financial thread” for some time. Losing their largest advertiser can be a mortal blow to any newspaper and it may well be to the PB Post.
My first reaction when I read about Napleton’s unfortunate incident in the PB Post, was surprise that the Post would dare report such a thing about their largest advertiser. I was on the verge of changing my mind about them because I’ve always believed most newspapers covered up for car dealers, giving them a free pass for fear of losing them as advertisers. Now, I’m beginning to doubt that theory. Upon reflection, I think that reporting Napleton’s DUI was an accident that slipped under the radar of the PB Post’s executives. Why else would they fail to report on all of the obvious violations by Napleton’s dealerships’ advertising in their own newspaper? I’ve written about many of his violations of Florida’s Unfair and Deceptive Trade Practices Act and these deceptive ads appear almost daily in full page and color right in their own newspaper!
Or maybe it wasn’t that the Post’s editors missed this DUI story but that they just couldn’t resist a juicy story that would sell lots of newspapers. Whatever the case, things have got to be buzzing at the PB Post and I wouldn’t be surprised to see some “heads roll”. This is just a guess, but I have to believe that the advertising department has launched a major effort to regain their largest advertiser. It’s going to be very interesting to wait and see if Napleton begins to advertise again. And if he does, what sort of concessions the PB Post had to make to accomplish this.
In closing, I commend those few members of the media who do print and broadcast the whole truth in spite of consequences including advertisers who threaten to cancel or do cancel their advertising. The Hometown News is one of those newspapers and Seaview Radio is one of those radio stations. Steve Erlanger, the publisher of Hometown News, and Chet Tart the General Manager of Seaview Radio allow me my platform to “tell it like it is” about South Florida car dealers. I know that both of these men would enjoy a lot more revenue from local car dealers if they refused to let me tell the truth. That’s the way journalism used to be and that’s the way it should be.
Three Sundays ago, one of the larger car dealers in Palm Beach County, Ed Napleton, was arrested for DUI and jailed overnight. Napleton has several car dealerships in Palm Beach County, including Nissan, Hyundai, Kia, Chrysler-Dodge-Jeep, and Lincoln Mercury. Now, this isn’t the news I feel compelled to report because I don’t really consider this sort of personal tragedy news. What I do feel is newsworthy is that the Palm Beach Post did report it in their newspaper and website and in tabloid-like juicy detail. You can read their web posting at PBPostNapletonDUI and see if you agree.
They say that celebrities like Charlie Sheen, are fair game for this sort thing, but a local businessman who never even appeared on TV or had his picture in the paper?
What clinched the news worthiness of this column was the fact that Ed Napleton has retaliated against the PB Post by cancelling all of his advertising. This doesn’t sound very interesting unless you understand that Ed Napleton spends very large sums of money advertising in the Post and is their largest car dealer advertiser. In fact, he may be their largest advertiser period.
As you know, newspapers have seen better economic times. In fact, over the past several years many newspapers have closed up shop, many have declared bankruptcy, and most others are teetering on bankruptcy. The PB Post has been “hanging by a financial thread” for some time. Losing their largest advertiser can be a mortal blow to any newspaper and it may well be to the PB Post.
My first reaction when I read about Napleton’s unfortunate incident in the PB Post, was surprise that the Post would dare report such a thing about their largest advertiser. I was on the verge of changing my mind about them because I’ve always believed most newspapers covered up for car dealers, giving them a free pass for fear of losing them as advertisers. Now, I’m beginning to doubt that theory. Upon reflection, I think that reporting Napleton’s DUI was an accident that slipped under the radar of the PB Post’s executives. Why else would they fail to report on all of the obvious violations by Napleton’s dealerships’ advertising in their own newspaper? I’ve written about many of his violations of Florida’s Unfair and Deceptive Trade Practices Act and these deceptive ads appear almost daily in full page and color right in their own newspaper!
Or maybe it wasn’t that the Post’s editors missed this DUI story but that they just couldn’t resist a juicy story that would sell lots of newspapers. Whatever the case, things have got to be buzzing at the PB Post and I wouldn’t be surprised to see some “heads roll”. This is just a guess, but I have to believe that the advertising department has launched a major effort to regain their largest advertiser. It’s going to be very interesting to wait and see if Napleton begins to advertise again. And if he does, what sort of concessions the PB Post had to make to accomplish this.
In closing, I commend those few members of the media who do print and broadcast the whole truth in spite of consequences including advertisers who threaten to cancel or do cancel their advertising. The Hometown News is one of those newspapers and Seaview Radio is one of those radio stations. Steve Erlanger, the publisher of Hometown News, and Chet Tart the General Manager of Seaview Radio allow me my platform to “tell it like it is” about South Florida car dealers. I know that both of these men would enjoy a lot more revenue from local car dealers if they refused to let me tell the truth. That’s the way journalism used to be and that’s the way it should be.
Monday, January 31, 2011
CAR OWNERS AGAINST DECEPTIVE DEALERS
Regular readers of this column/blog know that I’ve been “fighting the good fight” against car dealers’ deceptive sales practices and advertising many years. Besides this column, I also warn and advise my radio listeners every Saturday morning and every weekday how not to be “ripped off” by car dealers’ deception. Many of you have seen my TV advertisements calling for making the dealer fee illegal. I even took the fight to our Florida legislature when I testified against the dealer fee in front of the Senate Commerce commission.
I’ve made some progress but it’s been an uphill battle. The auto dealers have powerful lobbying groups that make it almost impossible to get any car consumer protection legislation passed. Our state regulators are sadly deficient in regulating our current laws and responding to consumer complaints. I see illegal advertisement running consistently on TV and radio and in our newspapers. The media is reluctant to expose the illegal and unethical advertising and sales practices because car dealers are among their largest advertisers.
I believe the only way to get the attention of our politicians, regulators and the media is by organizing the car owners of Florida and having their voices heard. Therefore I recently announced on my radio show that I would like to form an organization tentatively named C.O.A.D.D., Car Owners Against Deceptive Dealers. The response from my radio audience has been very positive and many listeners have already volunteered to become a part of COADD. Below, I’ll describe my vision of this car owner activist consumer group. If you have an interest of being a member or even on our board of directors, please contact me.
COADD would include members from Palm Beach County north through the Treasure Coast, including Martin and St. Lucie Counties. Eventually I envision growing south through Broward and Counties and eventually becoming statewide. COADD will be a nonprofit corporation controlled and operated by Florida car owners. No car dealers could be members and certainly not on the board of directors, but honest, ethical car dealers would be allowed in an honorary capacity as consultants. I would be the first of these dealers to serve.
I’ve been approached by one of Palm Beach County’s most prestigious law firms that is seriously considering helping COADD get formed as a nonprofit. A member of this firm would also sit on our board of directors. Once we are formed and have a bank account, I will contribute $10,000 to help us begin operations.
The first task of COADD should be to develop a car dealer code of ethics regarding their advertising and sales practices. All car dealers in Palm Beach, Martin, and St. Lucie Counties would be asked to sign a covenant stating that they would abide by these ethical rules. Those dealers who agree would become honorary members of COADD and could use this in their advertising. Of course, their advertising and sales practices would be regularly monitored to ensure compliance.
The next task of COADD would be enforce the code of ethics with all car dealers in our area, including those who refuse to sign the covenant. I suspect that there will be many car dealers that, at first, will refuse to sign, but I also suspect that growing pressure will force most to join. Those dealers that violate the code will be sent a certified warning for the first offense and given a reasonable time to comply. If they don’t comply, COADD will advise our regulatory agencies, of the violation(s). Which agencies will be notified will depend on the seriousness of the violation and can include the County Office of Consumer Affairs, Department of Motor Vehicles, and the Attorney General’s Office. Honorary dealer members that violate the code will be suspended and banned if they refuse to comply.
Raising funds is always a challenge for nonprofits. Once we begin to make an impact and are able to recruit more car dealers as associate/honorary members, COADD will charge them an annual fee for membership. This should be a significant source of revenue. Another task of COADD will be to help car owners who have been taken advantage of in buying or servicing their cars. This could also be a source of revenue because many victims would be willing to make a contribution if COADD successfully resolve their problems and saved them money. Nonprofit fund raising is not my field of expertise but there must be other sources of local, state, and federal funds for nonprofits that provide a valuable service to their communities. For membership in COAD, there would be a reasonable annual fee. Members would be give educational materials on how buy a car and service a car without getting ripped off and would be able to identify themselves to dealers with their membership card or even a pin. If a dealer attempted to take advantage of a member, she would have the full force of COADD’s support to defend her.
Equally important to funding is getting started with a good, strong, involved board of directors. Among South Florida’s greatest resources are highly qualified retires...Men and women who formerly owned or operated large and small companies, occupied high government and military posts, college presidents, and well known celebrities. High energy, high intelligent people like this love to lend their expertise to worthwhile nonprofit organizations and most of them have several horror stories to share about being mistreated by car dealers.
After I help fund and organize COADD I see my continuing role an advisor and publicist. I will use my radio show, blog, newspaper column, and local “celebrity status” to continually endorse and promote our organization. What I ask from you is to join our group as a member or, if qualified and willing to donate your time, as a board member. If you know somebody who would make a good board member, please let me know. I cannot overemphasize how important having the right mix of people on the organizing board of directors is.
I’ve made some progress but it’s been an uphill battle. The auto dealers have powerful lobbying groups that make it almost impossible to get any car consumer protection legislation passed. Our state regulators are sadly deficient in regulating our current laws and responding to consumer complaints. I see illegal advertisement running consistently on TV and radio and in our newspapers. The media is reluctant to expose the illegal and unethical advertising and sales practices because car dealers are among their largest advertisers.
I believe the only way to get the attention of our politicians, regulators and the media is by organizing the car owners of Florida and having their voices heard. Therefore I recently announced on my radio show that I would like to form an organization tentatively named C.O.A.D.D., Car Owners Against Deceptive Dealers. The response from my radio audience has been very positive and many listeners have already volunteered to become a part of COADD. Below, I’ll describe my vision of this car owner activist consumer group. If you have an interest of being a member or even on our board of directors, please contact me.
COADD would include members from Palm Beach County north through the Treasure Coast, including Martin and St. Lucie Counties. Eventually I envision growing south through Broward and Counties and eventually becoming statewide. COADD will be a nonprofit corporation controlled and operated by Florida car owners. No car dealers could be members and certainly not on the board of directors, but honest, ethical car dealers would be allowed in an honorary capacity as consultants. I would be the first of these dealers to serve.
I’ve been approached by one of Palm Beach County’s most prestigious law firms that is seriously considering helping COADD get formed as a nonprofit. A member of this firm would also sit on our board of directors. Once we are formed and have a bank account, I will contribute $10,000 to help us begin operations.
The first task of COADD should be to develop a car dealer code of ethics regarding their advertising and sales practices. All car dealers in Palm Beach, Martin, and St. Lucie Counties would be asked to sign a covenant stating that they would abide by these ethical rules. Those dealers who agree would become honorary members of COADD and could use this in their advertising. Of course, their advertising and sales practices would be regularly monitored to ensure compliance.
The next task of COADD would be enforce the code of ethics with all car dealers in our area, including those who refuse to sign the covenant. I suspect that there will be many car dealers that, at first, will refuse to sign, but I also suspect that growing pressure will force most to join. Those dealers that violate the code will be sent a certified warning for the first offense and given a reasonable time to comply. If they don’t comply, COADD will advise our regulatory agencies, of the violation(s). Which agencies will be notified will depend on the seriousness of the violation and can include the County Office of Consumer Affairs, Department of Motor Vehicles, and the Attorney General’s Office. Honorary dealer members that violate the code will be suspended and banned if they refuse to comply.
Raising funds is always a challenge for nonprofits. Once we begin to make an impact and are able to recruit more car dealers as associate/honorary members, COADD will charge them an annual fee for membership. This should be a significant source of revenue. Another task of COADD will be to help car owners who have been taken advantage of in buying or servicing their cars. This could also be a source of revenue because many victims would be willing to make a contribution if COADD successfully resolve their problems and saved them money. Nonprofit fund raising is not my field of expertise but there must be other sources of local, state, and federal funds for nonprofits that provide a valuable service to their communities. For membership in COAD, there would be a reasonable annual fee. Members would be give educational materials on how buy a car and service a car without getting ripped off and would be able to identify themselves to dealers with their membership card or even a pin. If a dealer attempted to take advantage of a member, she would have the full force of COADD’s support to defend her.
Equally important to funding is getting started with a good, strong, involved board of directors. Among South Florida’s greatest resources are highly qualified retires...Men and women who formerly owned or operated large and small companies, occupied high government and military posts, college presidents, and well known celebrities. High energy, high intelligent people like this love to lend their expertise to worthwhile nonprofit organizations and most of them have several horror stories to share about being mistreated by car dealers.
After I help fund and organize COADD I see my continuing role an advisor and publicist. I will use my radio show, blog, newspaper column, and local “celebrity status” to continually endorse and promote our organization. What I ask from you is to join our group as a member or, if qualified and willing to donate your time, as a board member. If you know somebody who would make a good board member, please let me know. I cannot overemphasize how important having the right mix of people on the organizing board of directors is.
Monday, January 24, 2011
Driving Your Car Using a Cell Phone
There’s nothing new about the controversy over using your cell phone while driving your car. It all began with a movement to require you to use a hands-free device so that you didn’t have to hold your phone to your ear while you conversed. Next it evolved to the fact that, hands-free device or not, simply talking on your cell phone is unsafe. Now the big drive is against texting, which is obviously something that requires your hands and eyes.
Now, I fear this thing is about to go “over the top”. It has just been reported (I read it in Automotive News and New York Times) that one of the cellular carriers, T-Mobile, has developed a technology that makes it impossible for you to use your cell phone while driving your car! In fact, they’re selling that app to users for $4.99 per month. Concurrently with this technological breakthrough, Ray LaHood, the chairman of NHTSA (National Highway Transportation Safety Association) is strongly advocating Federal regulation of the use of cell phones in cars. This means that our government, either thorough regulators or the legislature, could require all wireless carriers to make it impossible for you or me to use our cell phones while driving.
Now, I don’t want to turn this blog/column into a political commentary…we have too much of that already. I mentioned this subject on my weekly radio show last Saturday and received some rather strongly worded emails. Here’s an example:
I was listening 1-22-11 to Seaview radio and heard you posing a hypothetical question about the government shutting down cell phones in moving cars. Your wife then asked for comments and gave out the 877 # twice. Being a carefull [sic] driver, I pulled into a parking lot and called immediately but was told there was only a minute left and there was no way I would be able to express my opinion on air! So, you pose a STUPID, PARANOIA-induced question, ask for comments but cut the show off??? Wow! Well. Here's my answer anyhow: STOP trying to scare people about the government possibly doing something unlikely somewhere in the future!!! WHAT is wrong with you? Still upset McCain did not win? Get over it. The government is NOT the evil entity you put forward, sir. The government is We, the People.
Have we reached a point where we can’t be publically critical of our government? I hope not because there are a lot of countries in the world where that is exactly the case and I wouldn’t want to live in Iran or even China.
I’m 70 years old and lived about half of my life without a cell phone. I can tell you that the quality and productivity of my life has increased exponentially as a result of the cell phone, not to mention the smart phone and PC. I accomplish a large amount of work and personal related tasks everyday using my cell phone including the time I spend in my car. I’m a very safe driver, although my wife and my sons will tell you I drive too fast. Ever since the “safe driver” addendum to licenses came out, I’ve had that stamp on my license and I’ve never been involved in a traffic accident.
But forget about my personal experience, the percentage of traffic accidents, injuries and deaths has declined steadily for at least the past 50 years which includes the period of time we’ve had cell phones in our cars. Now I’m not going to argue that we couldn’t reduce accidents even more if we didn’t use our cell phones, but the same principal applies to lot of things we Americans like to do. Between 1919 and 1933 our government made it illegal to make, buy or sell alcohol in the USA. You know how that turned out. The only people who benefited from that moronic experience were guys like Al Capone and Bugsy Siegel. In fact, guys like them are probably already designing something that will override the device that T-Mobile invented to neuter our cell phone while driving.
I would love to hear what readers of this column and blog have to say about their freedom to use their cell phones while driving their cars. And I will close with this personal message to Ray LaHood….”I’ll give you my cell phone when you take it from my cold, dead hands” (For those nut-jobs who may be reading this, I’m just kidding!).
Now, I fear this thing is about to go “over the top”. It has just been reported (I read it in Automotive News and New York Times) that one of the cellular carriers, T-Mobile, has developed a technology that makes it impossible for you to use your cell phone while driving your car! In fact, they’re selling that app to users for $4.99 per month. Concurrently with this technological breakthrough, Ray LaHood, the chairman of NHTSA (National Highway Transportation Safety Association) is strongly advocating Federal regulation of the use of cell phones in cars. This means that our government, either thorough regulators or the legislature, could require all wireless carriers to make it impossible for you or me to use our cell phones while driving.
Now, I don’t want to turn this blog/column into a political commentary…we have too much of that already. I mentioned this subject on my weekly radio show last Saturday and received some rather strongly worded emails. Here’s an example:
I was listening 1-22-11 to Seaview radio and heard you posing a hypothetical question about the government shutting down cell phones in moving cars. Your wife then asked for comments and gave out the 877 # twice. Being a carefull [sic] driver, I pulled into a parking lot and called immediately but was told there was only a minute left and there was no way I would be able to express my opinion on air! So, you pose a STUPID, PARANOIA-induced question, ask for comments but cut the show off??? Wow! Well. Here's my answer anyhow: STOP trying to scare people about the government possibly doing something unlikely somewhere in the future!!! WHAT is wrong with you? Still upset McCain did not win? Get over it. The government is NOT the evil entity you put forward, sir. The government is We, the People.
Have we reached a point where we can’t be publically critical of our government? I hope not because there are a lot of countries in the world where that is exactly the case and I wouldn’t want to live in Iran or even China.
I’m 70 years old and lived about half of my life without a cell phone. I can tell you that the quality and productivity of my life has increased exponentially as a result of the cell phone, not to mention the smart phone and PC. I accomplish a large amount of work and personal related tasks everyday using my cell phone including the time I spend in my car. I’m a very safe driver, although my wife and my sons will tell you I drive too fast. Ever since the “safe driver” addendum to licenses came out, I’ve had that stamp on my license and I’ve never been involved in a traffic accident.
But forget about my personal experience, the percentage of traffic accidents, injuries and deaths has declined steadily for at least the past 50 years which includes the period of time we’ve had cell phones in our cars. Now I’m not going to argue that we couldn’t reduce accidents even more if we didn’t use our cell phones, but the same principal applies to lot of things we Americans like to do. Between 1919 and 1933 our government made it illegal to make, buy or sell alcohol in the USA. You know how that turned out. The only people who benefited from that moronic experience were guys like Al Capone and Bugsy Siegel. In fact, guys like them are probably already designing something that will override the device that T-Mobile invented to neuter our cell phone while driving.
I would love to hear what readers of this column and blog have to say about their freedom to use their cell phones while driving their cars. And I will close with this personal message to Ray LaHood….”I’ll give you my cell phone when you take it from my cold, dead hands” (For those nut-jobs who may be reading this, I’m just kidding!).
Monday, January 17, 2011
Auto Manufacturers Partly to Blame for Dealers’ Deceptive Car Pricing
For many years manufacturers have employed a device called “stair-step incentives” to motivate their dealers to sell more cars. A stair-step incentive is bonus money paid directly to the dealer to reward him for selling a certain quota of cars within a certain period of time, typically one month. The number of cars in the quota is decided upon by the manufacturer and is a higher number than the dealer would normally sell.
For example, a dealer who would normally sell 150 cars in one month might be given a quota of 200. If he hits his quota, he earns $250 retroactively on all 200 (or more) cars he sells that month, or $50,000+. If he sells only 199 or less, he earns nothing! It’s easy to understand why this would strongly motivate any car dealer to “do whatever it takes” to try to sell his quota.
Unfortunately “whatever it takes” sometimes translates into “irrational and crazy pricing” and those are the words of Mike Jackson, the CEO of AutoNation (the largest retail chain of car dealers in the USA}. He spoke before the World Automobile Congress recently and announced that he will make it his mission to end stair-step incentives by auto manufacturers.
At first, one might ask what’s wrong with incentivizing a car dealer to sell lots of cars by paying him a large bonus. The answer is that there’s nothing wrong with the concept, just with how the concept is applied. In my example above, the dealer gets $250 per car. If he got $250 every time he sold a car in that month, he would be inclined to discount each car by up to $250. But, the dealer only earns that $250 per car if he sells at least 200 cars and that’s more than he would normally sell. You can understand how the very first customer of the month might get a different price from the last customer, especially if the last customer was buying the 200th car! How can a car dealer tell a customer at the first of the month that this is the best price and give him his best price when even the dealer doesn’t know what he can afford to sell the car for? On the last day of the month, it’s perfectly feasible for a dealer to sell a car thousands of dollars below his cost if that’s the sale (200th car) that will allow him to hit his $50,000 bonus.
It might seem at first that this can be a great opportunity for the car buyer…just come in at the end of the month and buy the last car a dealer must sell to hit his quota. This does happen but the car buyer cannot plan for it any better than the car dealer can. The dealer may not hit his quota at all or he may have hit it earlier in the month. These stair-step incentives are secret incentives and aren’t advertised by the dealer or the manufacturer. In fact, usually the salesmen don’t even know about them. But the managers who control the price that is given to the customer do.
This kind of incentive makes it even more mandatory to do comparison price shopping. If you want to buy a new car or truck, you should shop and compare prices with no less than three other dealers of the same make. But, you have no way of knowing which dealers will make their stair-step bonus that month. The dealers that know they have no chance to sell their quota will maintain their normal pricing. Those that are committed to reaching their quota number (and believe they will) can discount their cars substantially more than the other dealer(s). The dealer that believes he can’t hit his quota can give you his lowest price but it won’t be as low as the dealer who will hit his quota.
The stair-step incentives favor larger volume dealers because they can earn larger bonuses. Imagine two dealers selling the same make of car the first of whom is a small dealer with a quota of 50 cars and the larger dealer has a quota of 500 cars. The first dealer earns $12,500 when he hits his quota but the larger dealer earns $125,000! Assume both dealers are “stretching” to hit their quotas in the last week of the month. Which dealer will likely offer you the best price? It’s pretty obvious that the larger dealer can literally give away one or more cars in order to earn his $125,000 bonus. This sort of thing is why the president of AutoNation referred to stair-step incentives as “irrational and crazy pricing”. And I wholeheartedly agree.
For example, a dealer who would normally sell 150 cars in one month might be given a quota of 200. If he hits his quota, he earns $250 retroactively on all 200 (or more) cars he sells that month, or $50,000+. If he sells only 199 or less, he earns nothing! It’s easy to understand why this would strongly motivate any car dealer to “do whatever it takes” to try to sell his quota.
Unfortunately “whatever it takes” sometimes translates into “irrational and crazy pricing” and those are the words of Mike Jackson, the CEO of AutoNation (the largest retail chain of car dealers in the USA}. He spoke before the World Automobile Congress recently and announced that he will make it his mission to end stair-step incentives by auto manufacturers.
At first, one might ask what’s wrong with incentivizing a car dealer to sell lots of cars by paying him a large bonus. The answer is that there’s nothing wrong with the concept, just with how the concept is applied. In my example above, the dealer gets $250 per car. If he got $250 every time he sold a car in that month, he would be inclined to discount each car by up to $250. But, the dealer only earns that $250 per car if he sells at least 200 cars and that’s more than he would normally sell. You can understand how the very first customer of the month might get a different price from the last customer, especially if the last customer was buying the 200th car! How can a car dealer tell a customer at the first of the month that this is the best price and give him his best price when even the dealer doesn’t know what he can afford to sell the car for? On the last day of the month, it’s perfectly feasible for a dealer to sell a car thousands of dollars below his cost if that’s the sale (200th car) that will allow him to hit his $50,000 bonus.
It might seem at first that this can be a great opportunity for the car buyer…just come in at the end of the month and buy the last car a dealer must sell to hit his quota. This does happen but the car buyer cannot plan for it any better than the car dealer can. The dealer may not hit his quota at all or he may have hit it earlier in the month. These stair-step incentives are secret incentives and aren’t advertised by the dealer or the manufacturer. In fact, usually the salesmen don’t even know about them. But the managers who control the price that is given to the customer do.
This kind of incentive makes it even more mandatory to do comparison price shopping. If you want to buy a new car or truck, you should shop and compare prices with no less than three other dealers of the same make. But, you have no way of knowing which dealers will make their stair-step bonus that month. The dealers that know they have no chance to sell their quota will maintain their normal pricing. Those that are committed to reaching their quota number (and believe they will) can discount their cars substantially more than the other dealer(s). The dealer that believes he can’t hit his quota can give you his lowest price but it won’t be as low as the dealer who will hit his quota.
The stair-step incentives favor larger volume dealers because they can earn larger bonuses. Imagine two dealers selling the same make of car the first of whom is a small dealer with a quota of 50 cars and the larger dealer has a quota of 500 cars. The first dealer earns $12,500 when he hits his quota but the larger dealer earns $125,000! Assume both dealers are “stretching” to hit their quotas in the last week of the month. Which dealer will likely offer you the best price? It’s pretty obvious that the larger dealer can literally give away one or more cars in order to earn his $125,000 bonus. This sort of thing is why the president of AutoNation referred to stair-step incentives as “irrational and crazy pricing”. And I wholeheartedly agree.
Monday, January 10, 2011
Caveat Emptor and Car Dealers
You Can Fool Some People All the Time
Almost everyone has read Abraham Lincoln’s popular saying, “You can fool some of the people all of the time, and all of the people some of the time, but you can’t fool all of the people all of the time.” I think Abe meant this to be a positive assertion that government may get away with deceiving us for a while, but in the long run, truth justice and the American way will prevail…and I think he was right.
However, it doesn’t work that way with unethical car dealers and car buyers. It always has been “caveat emptor”, or “buyer beware when it comes to buying or servicing a car. Unfortunately for a buyer to “beware” he must be “aware”…that is to say educated, mature, sophisticated and experienced. This excludes a very large segment of our population including the very young, the very old, the uneducated, those with low I.Q.’s and those not proficient in the English language. Is this one reason why our regulators and elected politicians don’t seem to care or take action with respect to the rampant unfair and deceptive sales practices of a large number of Florida car dealers? Most elected officials and regulators are lawyers and are highly educated and sophisticated. They don’t have a problem buying or servicing a car. In fact, the car dealer that tries to take advantage of a lawyer, regulator, or politician is asking for trouble.
I’ve been writing this column/blog and broadcasting my radio show, Earl Stewart on Cars, for about four years. I sometimes feel that I’m “preaching to the choir” when it comes to advising people how to avoid getting ripped off by a car dealer. You, my readers and listeners, largely fall into the category of the educated and sophisticated, “aware” buyer. Most of you aren’t taken advantage of when you buy or service your car because you won’t allow it. Unfortunately, there are enough uneducated, naive, and otherwise vulnerable consumers to feed those unethical car dealers who prey on the defenseless among us. All you have to do is read some of the car ads in the Saturday (the biggest selling day for most car dealers) auto classifieds. To the educated, sophisticated buyer, these ads are actually funny if you can forget the fact that so many fall prey to them and are taken advantage of by the dealers. For example, it’s hard for you or me to believe that anybody would respond to an advertisement without reading the fine print. Many dealers today are advertising prices that, when you read the fine print, are understated by many thousands of dollars. When you or I see a dealer stating that the car price is plus “freight”, we are educated enough to understand that the law requires that the freight cost be already included in the price. A shrewd buyer knows that “dealer list” is not the same thing as MSRP and that a large discount from “dealer list” means absolutely nothing. We know that the “lowest price guarantee’ is worthless if the dealer reserves the right to buy the car from the other dealer that offers a lower price.
There are those who argue that all buyers have the responsibility to guard against unethical sellers, to take care of themselves. In fact, that’s the literal translation of the Latin legal term “caveat emptor”…let the buyer beware. That’s sounds good, but what about the elderly widow whose husband recently died and who never had to make a the decision on a major purchase in her entire life? What about the young person just out of school with no experience in the real world? How about the immigrant who struggles with English? Should we be concerned about our underprivileged classes who often drop out of school because they have to go to work to support themselves or their family? You and I know lots of good people who, for one reason or another, simply can’t cope with a slick car or service salesman.
My bottom line is this, since we can’t rely on our regulators and politicians to protect those who “can be fooled all the time”, maybe we owe it to society to protect these folks. If you know someone who is thinking about buying a car or has a service problem with her car and you feel she may not have the ability to fend for herself with the car dealer, offer your support. If you’re one of the people who needs support, ask someone who can go “toe to toe” with a car dealer to come with you when you are car shopping. By the way, nobody, sophisticated or not, should car shop alone. Two heads are always better than one and it’s always a good idea to have a witness to what was said during a negotiation. And, of course, if you don’t have the time to help a person or you’re that person, you can always call me…I’m always here for you.
Almost everyone has read Abraham Lincoln’s popular saying, “You can fool some of the people all of the time, and all of the people some of the time, but you can’t fool all of the people all of the time.” I think Abe meant this to be a positive assertion that government may get away with deceiving us for a while, but in the long run, truth justice and the American way will prevail…and I think he was right.
However, it doesn’t work that way with unethical car dealers and car buyers. It always has been “caveat emptor”, or “buyer beware when it comes to buying or servicing a car. Unfortunately for a buyer to “beware” he must be “aware”…that is to say educated, mature, sophisticated and experienced. This excludes a very large segment of our population including the very young, the very old, the uneducated, those with low I.Q.’s and those not proficient in the English language. Is this one reason why our regulators and elected politicians don’t seem to care or take action with respect to the rampant unfair and deceptive sales practices of a large number of Florida car dealers? Most elected officials and regulators are lawyers and are highly educated and sophisticated. They don’t have a problem buying or servicing a car. In fact, the car dealer that tries to take advantage of a lawyer, regulator, or politician is asking for trouble.
I’ve been writing this column/blog and broadcasting my radio show, Earl Stewart on Cars, for about four years. I sometimes feel that I’m “preaching to the choir” when it comes to advising people how to avoid getting ripped off by a car dealer. You, my readers and listeners, largely fall into the category of the educated and sophisticated, “aware” buyer. Most of you aren’t taken advantage of when you buy or service your car because you won’t allow it. Unfortunately, there are enough uneducated, naive, and otherwise vulnerable consumers to feed those unethical car dealers who prey on the defenseless among us. All you have to do is read some of the car ads in the Saturday (the biggest selling day for most car dealers) auto classifieds. To the educated, sophisticated buyer, these ads are actually funny if you can forget the fact that so many fall prey to them and are taken advantage of by the dealers. For example, it’s hard for you or me to believe that anybody would respond to an advertisement without reading the fine print. Many dealers today are advertising prices that, when you read the fine print, are understated by many thousands of dollars. When you or I see a dealer stating that the car price is plus “freight”, we are educated enough to understand that the law requires that the freight cost be already included in the price. A shrewd buyer knows that “dealer list” is not the same thing as MSRP and that a large discount from “dealer list” means absolutely nothing. We know that the “lowest price guarantee’ is worthless if the dealer reserves the right to buy the car from the other dealer that offers a lower price.
There are those who argue that all buyers have the responsibility to guard against unethical sellers, to take care of themselves. In fact, that’s the literal translation of the Latin legal term “caveat emptor”…let the buyer beware. That’s sounds good, but what about the elderly widow whose husband recently died and who never had to make a the decision on a major purchase in her entire life? What about the young person just out of school with no experience in the real world? How about the immigrant who struggles with English? Should we be concerned about our underprivileged classes who often drop out of school because they have to go to work to support themselves or their family? You and I know lots of good people who, for one reason or another, simply can’t cope with a slick car or service salesman.
My bottom line is this, since we can’t rely on our regulators and politicians to protect those who “can be fooled all the time”, maybe we owe it to society to protect these folks. If you know someone who is thinking about buying a car or has a service problem with her car and you feel she may not have the ability to fend for herself with the car dealer, offer your support. If you’re one of the people who needs support, ask someone who can go “toe to toe” with a car dealer to come with you when you are car shopping. By the way, nobody, sophisticated or not, should car shop alone. Two heads are always better than one and it’s always a good idea to have a witness to what was said during a negotiation. And, of course, if you don’t have the time to help a person or you’re that person, you can always call me…I’m always here for you.
Monday, December 20, 2010
Pitfalls to Avoid When Having Your Car Serviced
Before I get into the pitfalls, it is important for you to understand how important it is to have your car serviced according to the manufacturer’s recommendations. The pitfalls and consequences of not doing so can be equal to or greater than those you might experience at the hands of an incompetent or unethical service department.
I strongly recommend that you have your car serviced and repaired by a franchised dealer of the make of your vehicle. I know that this statement, coming from a franchised car dealer, may be met with some skepticism. Listen to my reasons before passing judgment. Modern vehicles are highly complex computerized machines requiring very sophisticated diagnostic equipment and highly trained technicians. The evolution of new, expensive diagnostic equipment requires constant updating. The evolution of car technology requires continuing education of dealers’ factory trained technicians who attend many weeks of schools every year. Forty years ago, it was possible for a really good mechanic to fix anybody’s car. Those days are gone and your car needs a highly trained specialist with the very latest diagnostic equipment. It is impossible for an independent service company to be competent in servicing and repairing all makes of automobiles.
Carefully choose the dealership that will service your car. You do not have to take your car to the dealership that sold you the car for warranty repairs, as many believe. Every dealership of your make car will welcome your warranty and non warranty work. Do your homework on which dealer has the best service department. Every dealer is graded in customer satisfaction by the manufacturer. Ask to see a copy of his CSI (customer satisfaction index) scores. Check with the BBB and the County Office of Consumer Affairs.
When you take your car in for maintenance or repairs, always ask for an estimate. State law requires that a service department not exceed a written estimate by more than 10%. When paying your bill, scrutinize the detail to be sure that you know exactly what each charge means. Most service departments add a fee on top of everything else with various labels like “miscellaneous supplies”, “sundry supplies”, “environmental handling”, etc. This fee is simply a 5% or 10% charge tacked onto the total bill. If you object to this fee, which you certainly should, dealers will often waive it.
You will find that prices for maintenance like oil changes, alignments, tire rotation and balancing, etc. are usually priced competitively. Where you have to be careful is in the pricing of major repair items like transmission, engines, and air-conditioners. When quoted a price on a big repair, don’t be afraid to negotiate. If you let it be known that you are willing to take your car elsewhere (even if you’re bluffing), you can often negotiate the price down significantly.
You should always make an appointment before bringing your car in. Appointments should be scheduled at relative slow times and days. Avoid bringing your car in early on a Monday morning and other very busy times. You want the service advisor to spend as much time with you as is necessary. This will allow you to drive the car with the service advisor if necessary to identify a specific problem like a squeak, rattle or vibration. Pick your car up at a time when the service advisor or technician has time to road test the car with you again to be sure that the problem was fixed.
Don’t be shy about asking for a loaner car when you have to take your car back a 2nd or 3rd time for a repair that was not done properly. It’s the dealership’s fault and you should not be inconvenienced. On a comeback, always talk with the service manager directly. Also ask that they assign their best technician to the job.
As I have said in earlier columns, there is nothing more important than choosing the right dealership to do business with. No service department is perfect and never makes a mistake. What you want to find is that service department that, in addition to being competent, will fess up to their occasional mistakes, sincerely apologize and make them right.
I strongly recommend that you have your car serviced and repaired by a franchised dealer of the make of your vehicle. I know that this statement, coming from a franchised car dealer, may be met with some skepticism. Listen to my reasons before passing judgment. Modern vehicles are highly complex computerized machines requiring very sophisticated diagnostic equipment and highly trained technicians. The evolution of new, expensive diagnostic equipment requires constant updating. The evolution of car technology requires continuing education of dealers’ factory trained technicians who attend many weeks of schools every year. Forty years ago, it was possible for a really good mechanic to fix anybody’s car. Those days are gone and your car needs a highly trained specialist with the very latest diagnostic equipment. It is impossible for an independent service company to be competent in servicing and repairing all makes of automobiles.
Carefully choose the dealership that will service your car. You do not have to take your car to the dealership that sold you the car for warranty repairs, as many believe. Every dealership of your make car will welcome your warranty and non warranty work. Do your homework on which dealer has the best service department. Every dealer is graded in customer satisfaction by the manufacturer. Ask to see a copy of his CSI (customer satisfaction index) scores. Check with the BBB and the County Office of Consumer Affairs.
When you take your car in for maintenance or repairs, always ask for an estimate. State law requires that a service department not exceed a written estimate by more than 10%. When paying your bill, scrutinize the detail to be sure that you know exactly what each charge means. Most service departments add a fee on top of everything else with various labels like “miscellaneous supplies”, “sundry supplies”, “environmental handling”, etc. This fee is simply a 5% or 10% charge tacked onto the total bill. If you object to this fee, which you certainly should, dealers will often waive it.
You will find that prices for maintenance like oil changes, alignments, tire rotation and balancing, etc. are usually priced competitively. Where you have to be careful is in the pricing of major repair items like transmission, engines, and air-conditioners. When quoted a price on a big repair, don’t be afraid to negotiate. If you let it be known that you are willing to take your car elsewhere (even if you’re bluffing), you can often negotiate the price down significantly.
You should always make an appointment before bringing your car in. Appointments should be scheduled at relative slow times and days. Avoid bringing your car in early on a Monday morning and other very busy times. You want the service advisor to spend as much time with you as is necessary. This will allow you to drive the car with the service advisor if necessary to identify a specific problem like a squeak, rattle or vibration. Pick your car up at a time when the service advisor or technician has time to road test the car with you again to be sure that the problem was fixed.
Don’t be shy about asking for a loaner car when you have to take your car back a 2nd or 3rd time for a repair that was not done properly. It’s the dealership’s fault and you should not be inconvenienced. On a comeback, always talk with the service manager directly. Also ask that they assign their best technician to the job.
As I have said in earlier columns, there is nothing more important than choosing the right dealership to do business with. No service department is perfect and never makes a mistake. What you want to find is that service department that, in addition to being competent, will fess up to their occasional mistakes, sincerely apologize and make them right.
Monday, December 13, 2010
Foolish Reasons for Choosing Your Next Car
JD Power just came out with the results of their annual survey, “2010 Customer Retention Study”. This measures the likelihood that those driving a particular make car will buy another of the same make. I like this study because it sorts through all the many, many reasons people may consider and gives us the bottom line. Obviously, having a high probability of repeating with the same car manufacturer is very important to the success of that manufacturer.
The manufacturers with the highest probability of owners making their next purchase another of the same make are Ford and Honda. Sixty-two percent of Ford and Honda drivers will buy another. On the bottom of the list is SAAB with only “four percent” willing to buy another SAAB. The industry average is forty-eight percent.
Just below Ford and Honda on the top of the list are Toyota, Lexus, and Hyundai with sixty percent. And just above SAAB on the bottom of the list are Jaguar, Dodge, and Chrysler with sixteen, twenty-two, and twenty-four percent respectively. There’s only one GM make above the average and that’s Chevrolet with fifty-two percent.
There’s a second part to this survey that shocks me and those are the specific reasons most people have for choosing which make they buy and why they stay with that make or buy a different one.
There are nine reasons people buy a particular make and do or do not repeat with that make. The number one and two reasons are “seating arrangements” and “look/style”! In the lower half of reasons are “quality”, “fuel economy”, and “resale value”! It’s hard for me to understand why somebody would make the second largest investment of his life based on “looks/style” over safety, quality, fuel economy and resale value. But it’s true and the JD Power Company is a highly reliable and accurate surveyor.
Don’t be an average car buyer and make your purchase based largely on the color or the styling of the car. People who purchase cars for frivolous reasons probably haven’t done their homework and don’t know the important facts about the make they have decided upon. They also are inclined to buy a car too fast, based on only emotion. This means they usually overpay for the car. There’s no one a car dealer likes more than someone who “falls in love” with that shiny red convertible on the showroom floor and wants to drive it home ‘today’! There is no excuse for this especially in today’s “Age of Information”. With just a few clicks of your mouse you can access everything you could possibly want to know about every make of car sold in the USA.
The top reasons that you should consider when buying another car are quality, safety, reliability, resale value, and fuel economy. You can compare all makes of cars in all of these categories just by clicking on www.kbb.com (Kelly Blue Book) or www.Edmunds.com. You can also find this information in Consumer Reports magazine on online at www.ConsumerReports.com.
The manufacturers with the highest probability of owners making their next purchase another of the same make are Ford and Honda. Sixty-two percent of Ford and Honda drivers will buy another. On the bottom of the list is SAAB with only “four percent” willing to buy another SAAB. The industry average is forty-eight percent.
Just below Ford and Honda on the top of the list are Toyota, Lexus, and Hyundai with sixty percent. And just above SAAB on the bottom of the list are Jaguar, Dodge, and Chrysler with sixteen, twenty-two, and twenty-four percent respectively. There’s only one GM make above the average and that’s Chevrolet with fifty-two percent.
There’s a second part to this survey that shocks me and those are the specific reasons most people have for choosing which make they buy and why they stay with that make or buy a different one.
There are nine reasons people buy a particular make and do or do not repeat with that make. The number one and two reasons are “seating arrangements” and “look/style”! In the lower half of reasons are “quality”, “fuel economy”, and “resale value”! It’s hard for me to understand why somebody would make the second largest investment of his life based on “looks/style” over safety, quality, fuel economy and resale value. But it’s true and the JD Power Company is a highly reliable and accurate surveyor.
Don’t be an average car buyer and make your purchase based largely on the color or the styling of the car. People who purchase cars for frivolous reasons probably haven’t done their homework and don’t know the important facts about the make they have decided upon. They also are inclined to buy a car too fast, based on only emotion. This means they usually overpay for the car. There’s no one a car dealer likes more than someone who “falls in love” with that shiny red convertible on the showroom floor and wants to drive it home ‘today’! There is no excuse for this especially in today’s “Age of Information”. With just a few clicks of your mouse you can access everything you could possibly want to know about every make of car sold in the USA.
The top reasons that you should consider when buying another car are quality, safety, reliability, resale value, and fuel economy. You can compare all makes of cars in all of these categories just by clicking on www.kbb.com (Kelly Blue Book) or www.Edmunds.com. You can also find this information in Consumer Reports magazine on online at www.ConsumerReports.com.
Monday, November 29, 2010
The Cheapest Cars Can Cost Too Much!
This column was inspired by a news article in the PB Post on Monday, November 29 entitled “Cash-strapped county spending $9 million on cars”. The article went on to say “one recent county purchase was a new $28,000 2010 Ford Taurus SEL for County Commissioner Pricilla Taylor.
After I shook my head to ask why on Earth would the PB County government would be spending $9 million to buy new cars for themselves in these direst of economic times, I then thought “how dare they” spend taxpayers’ money for buying the wrong cars too!
It’s a really bad idea to buy last year’s model new car when you can buy the current model. This is especially so of the Ford Taurus because the 2010 is virtually identical to the 2011 and they are priced nearly the same. Car dealers will advertise last year’s model for less money, but if you negotiate you can buy the current model for the about the same price as the old model. This is especially true in today’s economic climate, a buyers’ market. Sometimes the manufacturers will offer special incentives to help the dealers clear out last year’s model, but the amount of the incentive can’t come close to covering the extra depreciation you experience buying a one year old car. When time comes to trade that car in or sell it, nobody cares when you bought your car; they care only what the year on your title says.
Palm Beach County and most governmental agencies buy their cars at special fleet prices offered by the manufacturers. They don’t pay retail. But the fleet prices for the 2010 and 2011 Taurus would have been almost the same. Fleet pricing sounds like a good deal for the governments but it isn’t really. The manufacturers sell cars to fleets like the government and big rental companies at drastically reduced prices, often less than they sell cars to their own dealers. In fact, manufacturers will sometimes actually sell cars to large fleets for less money than it costs them to build the cars. Why, you ask, would they ever do such a thing? It’s less costly for a manufacturer to lose a few hundred dollars on a few thousand cars than have to close down shifts or entire manufacturing plants and reopen them at a later time. They have to pay UAW workers whether they’re building cars or not and the cost of shutting down and reopening plants is huge. Ford, GM, and Chrysler sell fleets anywhere from a one-quarter to one-third of all the cars they build.
This all brings me to the second big mistake Palm Beach County made when they bought a 2010 Ford Taurus for Mrs. Taylor. It’s “Economics 101” that when you flood the market with a product at below market prices, you drive down the resale value of the product. Why are diamonds so expensive? It’s not because they’re so pretty because a cubic zirconium is just as pretty. It’s because the number of diamonds on the market is controlled and limited by a giant cartel, DeBeers. If they didn’t do this, your diamond ring would plummet in value. Ford sells thousands of Taurus’s to governments and large rental companies at greatly discounted prices. When these large fleets buy new cars, they dump their old cars on the market at auto auctions. It’s all a matter of supply and demand. Selling too many Taurus’s over too short a time drives down the price. This also affects the unsuspecting retail buyer who buys and sells just one car at a time.
If you need proof of all of the above, just click on www.ALG.com/FleetResidualValues. ALG is Auto Lease Guide which is the “bible” for how fast cars depreciate. Every bank, car dealer, and leasing company relies on ALG to set their prices on leasing. The residual value is the estimated value of new car 1, 2, 3,, 4, or 5 years hence. The residual is expressed as a percent of the cars original cost. A car with a 4 year residual of 25% would depreciate twice as fast as one with a 50%. If you go to the above website, you’ll find that the Ford Taurus has a very low residual. In fact it’s rated with only 2 stars, with 5 stars being the best. An example of a car with a 5 star residual is the Honda Accord. Honda sells very few cars to large fleets, about 8% of their total production. The Honda Accord’s purchase price is about $2,000 more than the Ford Focus, but after looking at the difference in deprecation, is a much better buy.
The moral to my story is to be smarter than the Palm Beach County government and don’t just buy the “cheapest” car you can find. Never buy last year’s model new car when you can buy the current year and always check the projected resale/residual value of the new car you want to buy.
After I shook my head to ask why on Earth would the PB County government would be spending $9 million to buy new cars for themselves in these direst of economic times, I then thought “how dare they” spend taxpayers’ money for buying the wrong cars too!
It’s a really bad idea to buy last year’s model new car when you can buy the current model. This is especially so of the Ford Taurus because the 2010 is virtually identical to the 2011 and they are priced nearly the same. Car dealers will advertise last year’s model for less money, but if you negotiate you can buy the current model for the about the same price as the old model. This is especially true in today’s economic climate, a buyers’ market. Sometimes the manufacturers will offer special incentives to help the dealers clear out last year’s model, but the amount of the incentive can’t come close to covering the extra depreciation you experience buying a one year old car. When time comes to trade that car in or sell it, nobody cares when you bought your car; they care only what the year on your title says.
Palm Beach County and most governmental agencies buy their cars at special fleet prices offered by the manufacturers. They don’t pay retail. But the fleet prices for the 2010 and 2011 Taurus would have been almost the same. Fleet pricing sounds like a good deal for the governments but it isn’t really. The manufacturers sell cars to fleets like the government and big rental companies at drastically reduced prices, often less than they sell cars to their own dealers. In fact, manufacturers will sometimes actually sell cars to large fleets for less money than it costs them to build the cars. Why, you ask, would they ever do such a thing? It’s less costly for a manufacturer to lose a few hundred dollars on a few thousand cars than have to close down shifts or entire manufacturing plants and reopen them at a later time. They have to pay UAW workers whether they’re building cars or not and the cost of shutting down and reopening plants is huge. Ford, GM, and Chrysler sell fleets anywhere from a one-quarter to one-third of all the cars they build.
This all brings me to the second big mistake Palm Beach County made when they bought a 2010 Ford Taurus for Mrs. Taylor. It’s “Economics 101” that when you flood the market with a product at below market prices, you drive down the resale value of the product. Why are diamonds so expensive? It’s not because they’re so pretty because a cubic zirconium is just as pretty. It’s because the number of diamonds on the market is controlled and limited by a giant cartel, DeBeers. If they didn’t do this, your diamond ring would plummet in value. Ford sells thousands of Taurus’s to governments and large rental companies at greatly discounted prices. When these large fleets buy new cars, they dump their old cars on the market at auto auctions. It’s all a matter of supply and demand. Selling too many Taurus’s over too short a time drives down the price. This also affects the unsuspecting retail buyer who buys and sells just one car at a time.
If you need proof of all of the above, just click on www.ALG.com/FleetResidualValues. ALG is Auto Lease Guide which is the “bible” for how fast cars depreciate. Every bank, car dealer, and leasing company relies on ALG to set their prices on leasing. The residual value is the estimated value of new car 1, 2, 3,, 4, or 5 years hence. The residual is expressed as a percent of the cars original cost. A car with a 4 year residual of 25% would depreciate twice as fast as one with a 50%. If you go to the above website, you’ll find that the Ford Taurus has a very low residual. In fact it’s rated with only 2 stars, with 5 stars being the best. An example of a car with a 5 star residual is the Honda Accord. Honda sells very few cars to large fleets, about 8% of their total production. The Honda Accord’s purchase price is about $2,000 more than the Ford Focus, but after looking at the difference in deprecation, is a much better buy.
The moral to my story is to be smarter than the Palm Beach County government and don’t just buy the “cheapest” car you can find. Never buy last year’s model new car when you can buy the current year and always check the projected resale/residual value of the new car you want to buy.
Tuesday, November 16, 2010
Your Car’s Oil Pan: Its “Achilles Heel”
The container that holds your engine oil underneath your car is made of very thin, sheet metal often aluminum. Because the bottom of the oil pan is so thin, the opening that technicians use to drain your oil cannot hold very many threads. The oil plug which is removed and replaced every time your oil is changed clings to those few threads. The reason for this is that manufacturers try to make your car as light as possible so that they can meet their fuel economy requirements (CAFE) and, of course, the less metal there is in a part the cheaper it is. It might sound unreasonable to think how little it would cost to have an oil pan that was just one-quarter inch thicker, but multiply this by tens of thousands of parts on a car and pretty soon you’re talking lots of weight and lots of money.
Depending on the make and model of your car, you can expect the threads to wear out on your oil pan as early as 40,000 miles just from normal wear and tear. It can be sooner or later than that depending on how often you change your oil. The problem is that when this happens, there’s not a “safe” solution to the problem other than replacing your entire oil pan. This can cost anywhere from $150 to $350 depending on the make and model. There are lots of less expensive solutions some suggest like oversized plugs, rubber plugs, and re-threading but they are not 100% effective. If you gamble with one of these and the rubber plugs pops out, you’re looking at buying a new engine for thousands of dollars. In modern engines you have only a few “seconds” to stop an engine that loses its oil which is exactly what happens when the plug drops out.
As if this isn’t enough to concern you, the technician who changes your oil can easily strip the threads in the oil pan by over-tightening the oil plug. When this happens, you probably won’t know about it until you change your oil again and maybe not for several oil changes. Stripping threads isn’t necessarily an “all or nothing” event. Over tightening the drain plug slightly, repeatedly will cause the thread to wear out prematurely.
Each manufacturer has a specification for exactly how tight the oil plug must be in the oil pan. It’s measured in foot-pounds of torque and a typical spec would be 18 FP. If the plug isn’t tightened enough, it might fall out. This sometimes motivates the technician to over tighten the plug just to be safe. If the plug is too loose and falls out, it could cost him his job. To be sure that the oil plug is tightened exactly right, the technician must use a torque wrench which shows the foot-pounds of torque that the plug has been tightened to.
Believe it or not, many technicians still don’t use toque wrenches. Without one they are just “guessing” how tight your oil plug is. This is a good reason for you to be very careful who changes your oil. Don’t be shy and specifically ask the service department who changes your oil if their technicians use torque wrenches. It wouldn’t be bad idea to find out the manufacturer’s specification for torquing your oil drain plug. It shouldn’t be necessary if you have your oil changed by the dealer, but it might if you use an independent service company or quick-lube company.
The person who changes your oil is the lowest paid individual in that service department. He’s called a “lube tech” and it’s generally considered a starting position for an auto technician. The turnover in this position is usually much greater than for regular mechanical technicians. I’m sure why you can understand why this puts you at risk for not having the job done right.
Be very leery of advertising promoting cheap oil changes. It’s fine to save money having your car serviced, but you should be sure that the person working on your car knows what he’s doing and uses the proper tools. He must know the manufacturer’s specifications for tightening your particular oil plug and he must use a torque wrench. Ideally, you should find a trustworthy, knowledgeable lube technician and always have him perform all of your oil changes. That way, if there’s ever a question about who over-torqued or under-torqued your oil plug, there’s only one person who can be held to blame.
Depending on the make and model of your car, you can expect the threads to wear out on your oil pan as early as 40,000 miles just from normal wear and tear. It can be sooner or later than that depending on how often you change your oil. The problem is that when this happens, there’s not a “safe” solution to the problem other than replacing your entire oil pan. This can cost anywhere from $150 to $350 depending on the make and model. There are lots of less expensive solutions some suggest like oversized plugs, rubber plugs, and re-threading but they are not 100% effective. If you gamble with one of these and the rubber plugs pops out, you’re looking at buying a new engine for thousands of dollars. In modern engines you have only a few “seconds” to stop an engine that loses its oil which is exactly what happens when the plug drops out.
As if this isn’t enough to concern you, the technician who changes your oil can easily strip the threads in the oil pan by over-tightening the oil plug. When this happens, you probably won’t know about it until you change your oil again and maybe not for several oil changes. Stripping threads isn’t necessarily an “all or nothing” event. Over tightening the drain plug slightly, repeatedly will cause the thread to wear out prematurely.
Each manufacturer has a specification for exactly how tight the oil plug must be in the oil pan. It’s measured in foot-pounds of torque and a typical spec would be 18 FP. If the plug isn’t tightened enough, it might fall out. This sometimes motivates the technician to over tighten the plug just to be safe. If the plug is too loose and falls out, it could cost him his job. To be sure that the oil plug is tightened exactly right, the technician must use a torque wrench which shows the foot-pounds of torque that the plug has been tightened to.
Believe it or not, many technicians still don’t use toque wrenches. Without one they are just “guessing” how tight your oil plug is. This is a good reason for you to be very careful who changes your oil. Don’t be shy and specifically ask the service department who changes your oil if their technicians use torque wrenches. It wouldn’t be bad idea to find out the manufacturer’s specification for torquing your oil drain plug. It shouldn’t be necessary if you have your oil changed by the dealer, but it might if you use an independent service company or quick-lube company.
The person who changes your oil is the lowest paid individual in that service department. He’s called a “lube tech” and it’s generally considered a starting position for an auto technician. The turnover in this position is usually much greater than for regular mechanical technicians. I’m sure why you can understand why this puts you at risk for not having the job done right.
Be very leery of advertising promoting cheap oil changes. It’s fine to save money having your car serviced, but you should be sure that the person working on your car knows what he’s doing and uses the proper tools. He must know the manufacturer’s specifications for tightening your particular oil plug and he must use a torque wrench. Ideally, you should find a trustworthy, knowledgeable lube technician and always have him perform all of your oil changes. That way, if there’s ever a question about who over-torqued or under-torqued your oil plug, there’s only one person who can be held to blame.
Monday, November 08, 2010
Chrysler and General Motors Must Build Better Mousetraps
I know of no one who hasn’t heard the famous quote by Ralph Waldo Emerson, “Build a better mousetrap and the world will beat a path to your door”. In fact, I know of no one who can disagree with this basic truism.
As you well know, our government decided to use our taxes to keep GM and Chrysler alive. Over a year and many billions of dollars later both companies are claiming to be profitable and are planning to sell stock so that they can pay back a portion of what they owe us taxpayers. Of course, we will never really know how much money we’ve really spent in this futile rescue attempt. The latest secret that was revealed is that the US Treasury is giving GM a pass on paying taxes for several years. This required a change in the law that was kept very quiet until this fact was needed to pump up the price of GM’s IPO stock price. Wall Street was naturally very impressed to learn that General Motors will not have to pay taxes on any of the first $45B they earn, unlike all of their competitors. Talk about a competitive edge! How do you think this makes Ford Motor Company feel after they refused to take a handout from the government like GM. Our government is rewarding bad behavior and punishing good.
Consumer Reports just announced their list of the most reliable new vehicles for the new model year. Do you think that anybody in Washington D.C. is concerned about the fact that Chrysler is ranked “dead last” in reliability out of 27 makes sold in this country? How about the fact that the highest ranking for any GM car is #17 for Chevrolet? Buick is 18th, Cadillac 19th, and GMC is 21st! Of course Honda and Toyota dominate the reliability survey as always. There’s not one single American owned company in the top 10, but Ford is #11.
Washington seems to think that they can solve any problem by throwing enough money at it. The only reason that GM and Chrysler’s balance sheets look better and they are showing a profit this year is because of all the taxpayer’s money and “smoke and mirrors” accounting. I’m not taking a political position here because there were lots of politicians from both sides of the aisle who pushed for the bailout.
Now that GM and Chrysler have their bailout money, they’re reneging on their agreement to build smaller more fuel efficient cars. They’re lobbying to defeat the next plateau in EPA fuel economy standards. About a year ago, GM and Chrysler signed a deal with the White House agreeing to boost fuel-economy standards nearly 35% by 2016 but that’s because they had to “go along to get along”, in other words get their billions in bailout money. They’re now lobbying heavily to defeat Washington’s efforts to continue to improve fuel economy after 2016 with a goal of 62 mpg by 2025. There is no opposition from Honda, Toyota or most other manufacturers on this because they have confidence that they can meet these fuel economy standards.
The simple facts are that it’s easier and cheaper to build lower quality cars and big gas guzzlers and sell them for too much money than it is to build fuel efficient cars, trucks, and vans. GM and Chrysler live or die on the price of gasoline. When gas prices are relatively low, they can sell enough Chevy Suburbans, Cadillac Escalades, RAM pickup trucks, and other gas guzzler models to be profitable. One of the reasons that GM and Chrysler made profits this year is relatively low gas prices. Everybody knows that it’s only a matter of time before oil and gas prices rise to record levels. Ten years from now we will look back fondly on $3 and $4 gasoline. When that happens, GM and Chrysler will go bankrupt again. There isn’t enough time for them to reengineer a new line of fuel efficient cars and trucks and, even if there were, they are so far behind in the quality game it wouldn’t make a difference.
The Chevrolet Volt is a PR stunt, nothing more. GM will build only 11,000 Volts next year and they will be sold in only 23 states, not in Florida. One reason that GM won’t build more Volts is that it costs more to build them than they can sell them for. The Volts sole purpose is to provide a halo effect around their line of low quality gas guzzlers.
Are you ready to bail out GM a second time and Chrysler a third time? I’m not.
As you well know, our government decided to use our taxes to keep GM and Chrysler alive. Over a year and many billions of dollars later both companies are claiming to be profitable and are planning to sell stock so that they can pay back a portion of what they owe us taxpayers. Of course, we will never really know how much money we’ve really spent in this futile rescue attempt. The latest secret that was revealed is that the US Treasury is giving GM a pass on paying taxes for several years. This required a change in the law that was kept very quiet until this fact was needed to pump up the price of GM’s IPO stock price. Wall Street was naturally very impressed to learn that General Motors will not have to pay taxes on any of the first $45B they earn, unlike all of their competitors. Talk about a competitive edge! How do you think this makes Ford Motor Company feel after they refused to take a handout from the government like GM. Our government is rewarding bad behavior and punishing good.
Consumer Reports just announced their list of the most reliable new vehicles for the new model year. Do you think that anybody in Washington D.C. is concerned about the fact that Chrysler is ranked “dead last” in reliability out of 27 makes sold in this country? How about the fact that the highest ranking for any GM car is #17 for Chevrolet? Buick is 18th, Cadillac 19th, and GMC is 21st! Of course Honda and Toyota dominate the reliability survey as always. There’s not one single American owned company in the top 10, but Ford is #11.
Washington seems to think that they can solve any problem by throwing enough money at it. The only reason that GM and Chrysler’s balance sheets look better and they are showing a profit this year is because of all the taxpayer’s money and “smoke and mirrors” accounting. I’m not taking a political position here because there were lots of politicians from both sides of the aisle who pushed for the bailout.
Now that GM and Chrysler have their bailout money, they’re reneging on their agreement to build smaller more fuel efficient cars. They’re lobbying to defeat the next plateau in EPA fuel economy standards. About a year ago, GM and Chrysler signed a deal with the White House agreeing to boost fuel-economy standards nearly 35% by 2016 but that’s because they had to “go along to get along”, in other words get their billions in bailout money. They’re now lobbying heavily to defeat Washington’s efforts to continue to improve fuel economy after 2016 with a goal of 62 mpg by 2025. There is no opposition from Honda, Toyota or most other manufacturers on this because they have confidence that they can meet these fuel economy standards.
The simple facts are that it’s easier and cheaper to build lower quality cars and big gas guzzlers and sell them for too much money than it is to build fuel efficient cars, trucks, and vans. GM and Chrysler live or die on the price of gasoline. When gas prices are relatively low, they can sell enough Chevy Suburbans, Cadillac Escalades, RAM pickup trucks, and other gas guzzler models to be profitable. One of the reasons that GM and Chrysler made profits this year is relatively low gas prices. Everybody knows that it’s only a matter of time before oil and gas prices rise to record levels. Ten years from now we will look back fondly on $3 and $4 gasoline. When that happens, GM and Chrysler will go bankrupt again. There isn’t enough time for them to reengineer a new line of fuel efficient cars and trucks and, even if there were, they are so far behind in the quality game it wouldn’t make a difference.
The Chevrolet Volt is a PR stunt, nothing more. GM will build only 11,000 Volts next year and they will be sold in only 23 states, not in Florida. One reason that GM won’t build more Volts is that it costs more to build them than they can sell them for. The Volts sole purpose is to provide a halo effect around their line of low quality gas guzzlers.
Are you ready to bail out GM a second time and Chrysler a third time? I’m not.
Monday, November 01, 2010
Pontiac Dies at 84. October 31, 2010
Sunday, October 31 (Halloween) was the day all remaining Pontiac dealers’ GM franchises expired. Pontiac built their last car about one year ago. Most of you think of me as a Toyota dealer, but I got into this crazy business 42 years ago when I joined my father’s Pontiac dealership in West Palm Beach. My father got into the car business in 1926, but not as a car dealer. He worked for the factory, Oakland, in Pontiac, Michigan. That’s where and when Pontiac was born and was originally named the Oakland.
Dad decided he wanted to give retail a try and started the first Pontiac dealership in Palm Beach County in 1937. He borrowed $10,000 from my mother and she ran the accounting department (I guess she wanted to keep an eye on her investment). His sales department was a man named Harper Clark who went on to become the first Oldsmobile dealer in Palm Beach County. Dad’s service department was a guy named “Slim” Angevine. The first car my father sold was a 1937 Chieftain and the buyer was Annie Swann. She paid $936 for the car plus tax, tag, and a 50 cent “dealer fee”. My father bought this car back from Annie in the late sixties (for exactly what she paid for it new). We had the car restored to absolutely new condition (all original parts) and it sits in the place of honor on my Toyota showroom floor today.
A lot of people think I’m a typical foreign car dealer when I criticize General Motors and Chrysler for what I say led to their demise. But what many don’t know is that I have real soft spot in my heart for GM and especially Pontiac. I feel like I have a special insight into what happened with GM and Pontiac because I was “along for the ride”. I remember when Pontiac was one of the most exciting and sought after cars in the USA. When I joined Pontiac in 1968, we were number three in sales, behind Chevrolet and Ford. GM had over half of the US car market and feared an antitrust suit for running a monopoly.
Back then it was about styling and power. The Pontiac Trans Am and GTO were the kings of the road. Gas was cheap and nobody complained about quality because everything is relative. Nobody else was building a car that was any better, so who was going to complain. I remember finding an empty vodka bottle inside the door panel of a Pontiac Bonneville after the customer complained of a rattle. I remember a customer bringing a Le Mans convertible back after he bought it because he couldn’t find the switch to lower the top. After a careful inspection, we discovered the problem…Pontiac had forgotten to put the switch on the car.
Then, as you know, things changed. Do you remember the Arab oil embargo of the seventies? All of a sudden Americans were waiting in line for gas and many gas stations just didn’t have any gas at all. That GTO with dual 4-barrel carburetors and a supercharger that got 10 mpg (if you were lucky), suddenly was a problem. About the same time, Americans began noticing these strange little cars with funny names…Honda, Datsun, Toyota, and Mazda. This didn’t seem to worry Detroit because everybody knew that this “gas thing” was only temporary and there was an unlimited supply of oil under the ground. Also, these funny little cars really weren’t built all that much better but they sure did get a lot better gas mileage.
It was in 1970 that I first decided I better “hedge my bet” and I took on the Mazda franchise. I was the first Mazda dealer east of the Mississippi. We were building our Mazda dealership (actually renovating an old gas station) so I temporarily displayed a Mazda on my Pontiac showroom floor. One day, the Pontiac zone manager dropped in and walked up to me while I was standing in the Pontiac showroom. His words to me are indelibly engraved in my brain…”Get that goddamned ‘Jap car’ off my showroom”. The Pontiac manager’s name was Murphy (Murph) Martin and he personified GM’s arrogance and blindness toward the Japanese competition. I bought the Toyota franchise in North Palm Beach (Lake Park) in 1975 as a further hedge.
In the late nineties, the “handwriting on the wall” was transferred to my Pontiac financial statement. As fast as my Toyota dealership and Mazda dealerships made money, my Pontiac was losing it. We simply couldn’t compete with the Japanese cars fuel economy, quality, and price. I had a personal dilemma too. Often friends of mine would look me in the eye and say, “Would you recommend that I buy a Toyota or a Pontiac”. If I told my friend the truth, I was being disloyal to all of my employees at the Pontiac dealership. Pontiac and GM’s quality gap was huge with the Japanese imports. At my Toyota dealership we did practically no warranty work but at the Pontiac dealership we did a huge amount. Chuck Schumacher, the Buick dealer then and now, had been calling me every few months for a while asking if I would sell him the Pontiac franchise. He also had Oldsmobile and GMC truck and wanted to add Pontiac to the “family”. I turned him down for as long as I did for purely sentimental reasons. He finally “made me an offer I couldn’t refuse” and I sold him Pontiac.
The rest is history. The Japanese cars continued to improve (kaizen) their quality, their fuel economy (which was already far superior), and their styling and they even priced their cars lower than Detroit’s. GM, Ford, and Chrysler just never “got it’. They had their head in the sand and when they pulled their heads out it was too late.
My three sons (Stu, Jason, Josh) and my wife (Nancy) all work with me in my Toyota dealership and I try to remind them often that we must never underestimate our competition like Detroit did the Japanese car makers. You can bet we have our eyes on Hyundai. Toyota began to get a little arrogant and complacent not too long ago, but snapped back into reality recently with the “cold shower” of media and governmental attacks over the recalls. Looking back on that experience, I’m actually glad it happened. I’m not saying NHTSA, the media, and the politicians dealt fairly with Toyota…far from it. But what happened, humbled and frightened Toyota and made them realize that they could lose everything they had worked so hard for if they ever again became over confident and underestimated the competition.
Dad decided he wanted to give retail a try and started the first Pontiac dealership in Palm Beach County in 1937. He borrowed $10,000 from my mother and she ran the accounting department (I guess she wanted to keep an eye on her investment). His sales department was a man named Harper Clark who went on to become the first Oldsmobile dealer in Palm Beach County. Dad’s service department was a guy named “Slim” Angevine. The first car my father sold was a 1937 Chieftain and the buyer was Annie Swann. She paid $936 for the car plus tax, tag, and a 50 cent “dealer fee”. My father bought this car back from Annie in the late sixties (for exactly what she paid for it new). We had the car restored to absolutely new condition (all original parts) and it sits in the place of honor on my Toyota showroom floor today.
A lot of people think I’m a typical foreign car dealer when I criticize General Motors and Chrysler for what I say led to their demise. But what many don’t know is that I have real soft spot in my heart for GM and especially Pontiac. I feel like I have a special insight into what happened with GM and Pontiac because I was “along for the ride”. I remember when Pontiac was one of the most exciting and sought after cars in the USA. When I joined Pontiac in 1968, we were number three in sales, behind Chevrolet and Ford. GM had over half of the US car market and feared an antitrust suit for running a monopoly.
Back then it was about styling and power. The Pontiac Trans Am and GTO were the kings of the road. Gas was cheap and nobody complained about quality because everything is relative. Nobody else was building a car that was any better, so who was going to complain. I remember finding an empty vodka bottle inside the door panel of a Pontiac Bonneville after the customer complained of a rattle. I remember a customer bringing a Le Mans convertible back after he bought it because he couldn’t find the switch to lower the top. After a careful inspection, we discovered the problem…Pontiac had forgotten to put the switch on the car.
Then, as you know, things changed. Do you remember the Arab oil embargo of the seventies? All of a sudden Americans were waiting in line for gas and many gas stations just didn’t have any gas at all. That GTO with dual 4-barrel carburetors and a supercharger that got 10 mpg (if you were lucky), suddenly was a problem. About the same time, Americans began noticing these strange little cars with funny names…Honda, Datsun, Toyota, and Mazda. This didn’t seem to worry Detroit because everybody knew that this “gas thing” was only temporary and there was an unlimited supply of oil under the ground. Also, these funny little cars really weren’t built all that much better but they sure did get a lot better gas mileage.
It was in 1970 that I first decided I better “hedge my bet” and I took on the Mazda franchise. I was the first Mazda dealer east of the Mississippi. We were building our Mazda dealership (actually renovating an old gas station) so I temporarily displayed a Mazda on my Pontiac showroom floor. One day, the Pontiac zone manager dropped in and walked up to me while I was standing in the Pontiac showroom. His words to me are indelibly engraved in my brain…”Get that goddamned ‘Jap car’ off my showroom”. The Pontiac manager’s name was Murphy (Murph) Martin and he personified GM’s arrogance and blindness toward the Japanese competition. I bought the Toyota franchise in North Palm Beach (Lake Park) in 1975 as a further hedge.
In the late nineties, the “handwriting on the wall” was transferred to my Pontiac financial statement. As fast as my Toyota dealership and Mazda dealerships made money, my Pontiac was losing it. We simply couldn’t compete with the Japanese cars fuel economy, quality, and price. I had a personal dilemma too. Often friends of mine would look me in the eye and say, “Would you recommend that I buy a Toyota or a Pontiac”. If I told my friend the truth, I was being disloyal to all of my employees at the Pontiac dealership. Pontiac and GM’s quality gap was huge with the Japanese imports. At my Toyota dealership we did practically no warranty work but at the Pontiac dealership we did a huge amount. Chuck Schumacher, the Buick dealer then and now, had been calling me every few months for a while asking if I would sell him the Pontiac franchise. He also had Oldsmobile and GMC truck and wanted to add Pontiac to the “family”. I turned him down for as long as I did for purely sentimental reasons. He finally “made me an offer I couldn’t refuse” and I sold him Pontiac.
The rest is history. The Japanese cars continued to improve (kaizen) their quality, their fuel economy (which was already far superior), and their styling and they even priced their cars lower than Detroit’s. GM, Ford, and Chrysler just never “got it’. They had their head in the sand and when they pulled their heads out it was too late.
My three sons (Stu, Jason, Josh) and my wife (Nancy) all work with me in my Toyota dealership and I try to remind them often that we must never underestimate our competition like Detroit did the Japanese car makers. You can bet we have our eyes on Hyundai. Toyota began to get a little arrogant and complacent not too long ago, but snapped back into reality recently with the “cold shower” of media and governmental attacks over the recalls. Looking back on that experience, I’m actually glad it happened. I’m not saying NHTSA, the media, and the politicians dealt fairly with Toyota…far from it. But what happened, humbled and frightened Toyota and made them realize that they could lose everything they had worked so hard for if they ever again became over confident and underestimated the competition.
Monday, October 25, 2010
You Should Be Concerned About Auto Fleet Sales
Fleet sales are to daily rental companies, commercial, and government agencies. These are volume sales, not usually one at time but up to “thousands” at a time. Rental and leasing companies hunkered down during the recession and stopped buying new vehicles. They hung onto their old vehicles just like many individuals did.
But, as a result of the recession and fewer new vehicles being sold and more people buying used car than new, the value of used cars has risen. The big fleet buyers see that as an opportunity to sell their current used cars at auctions and replace them with new. It’s truly a buyer’s market for fleet buyers. Not only can they sell their old fleet for more money, but they can replace those cars at unprecedented low prices from the manufacturers.
Large fleets have always been able to buy cars for less money than you can because they buy in much larger volume. In most cases, they deal directly with the manufacturer and often buy cars for less money than the dealers can buy them for. Sometimes the sales transaction “passes through” the dealer, but the price is often determined by the manufacturer and the special, low prices are only for fleet buyers. Dealers also sell directly to fleets and even when these prices are not subsidized by the manufacturer, they are lower than you can buy the car for.
Manufacturers will actually sell cars to fleets below their cost! This is especially true in these bad economic times. Desperate manufacturers like Chrysler and GM who have recently declared bankruptcy and are struggling for survival need to keep their plants running and need to present a positive picture to the public and their lenders (us taxpayers). It’s actually less expensive for a manufacturer to sell cars below their cost than to close the plant down. When Chrysler or GM closes a plant and lays off workers, they encounter huge expenses. They have keep paying the UAW workers even though they aren’t working and the cost of stopping and restarting the assembly lines is very large too. They would prefer to lose a few thousand on each car and pray that the economy gets better.
GM is getting close to an IPO, selling stock to us taxpayers so that they can pay back the government. To keep that stock price high, they want to be able to report higher sales. This is what the press focuses on and amazingly they never differentiate between retail sales and fleet. Last month (September) 39% of Chrysler’s sales were to fleets. 25% of GM’s and 29% of Ford’s were to fleets. Only 7% of Honda’s and 9% of Toyota’s were “reportedly” fleet. I say “reportedly” with respect to Honda and Toyota because some of their fleet sales go unreported. Dealers can sell cars to fleets but they get counted as retail. The industry term for these kinds of sales is “fleetail”. The dealers can collect retail incentive money on these which they can’t on “official” fleet sales. Also fleetail sales count as retail toward their sales quotas, contests, and sales awards. Dealers are inclined to sell fleetail cars at or even below cost because of this. We don’t know how many Honda and Toyota retail sales are truly retail and which are fleet/fleetail.
Here’s why these fleet sales are bad for you. All of these cars that are sold to Hertz, Avis, and the US Government don’t just “vanish into thin air”. They come back on the used car market through auto auctions all over the USA. If you bought a Ford Focus this year and Ford also sold 20,000 Ford Focuses to the fleets, Ford caused your Focus to depreciate at a much higher rate than it would have otherwise. This is simply the economic law of supply and demand. The more used Focuses that Ford sells at the Manheim auctions in 2013 (the same year you are ready to trade yours in for a new car) the lower the price they have to sell them for. The bottom line is that that new car could cost you an extra $2,000 based on the lowered trade-in value of your Focus.
My advice to you is to carefully consider the number of fleet/fleetail sales the various manufacturers are making when purchasing your next new car. Chrysler is clearly the leader in fleet sales and I would avoid Chrysler products like the plague unless I planned to never trade it in. I’d lease a Chrysler product if I absolutely had to have one. You aren’t responsible for selling the used car at the end of the lease. Of course you already paid for the high depreciation in your lease payments unless Chrysler over estimated the residual which is possible. Ford and GM are also big fleet sellers. A good guide to consult is the industry “bible” for future used car values, called residuals. This is the Auto Leasing Guide, ALG. Every dealer and manufacturer has one. You can ask your dealer to see his copy (If he won’t just email or call me). This guide is the best estimate of what a new car bought today will be worth in 1, 2, 3, 4, 5, or even 6 years.
But, as a result of the recession and fewer new vehicles being sold and more people buying used car than new, the value of used cars has risen. The big fleet buyers see that as an opportunity to sell their current used cars at auctions and replace them with new. It’s truly a buyer’s market for fleet buyers. Not only can they sell their old fleet for more money, but they can replace those cars at unprecedented low prices from the manufacturers.
Large fleets have always been able to buy cars for less money than you can because they buy in much larger volume. In most cases, they deal directly with the manufacturer and often buy cars for less money than the dealers can buy them for. Sometimes the sales transaction “passes through” the dealer, but the price is often determined by the manufacturer and the special, low prices are only for fleet buyers. Dealers also sell directly to fleets and even when these prices are not subsidized by the manufacturer, they are lower than you can buy the car for.
Manufacturers will actually sell cars to fleets below their cost! This is especially true in these bad economic times. Desperate manufacturers like Chrysler and GM who have recently declared bankruptcy and are struggling for survival need to keep their plants running and need to present a positive picture to the public and their lenders (us taxpayers). It’s actually less expensive for a manufacturer to sell cars below their cost than to close the plant down. When Chrysler or GM closes a plant and lays off workers, they encounter huge expenses. They have keep paying the UAW workers even though they aren’t working and the cost of stopping and restarting the assembly lines is very large too. They would prefer to lose a few thousand on each car and pray that the economy gets better.
GM is getting close to an IPO, selling stock to us taxpayers so that they can pay back the government. To keep that stock price high, they want to be able to report higher sales. This is what the press focuses on and amazingly they never differentiate between retail sales and fleet. Last month (September) 39% of Chrysler’s sales were to fleets. 25% of GM’s and 29% of Ford’s were to fleets. Only 7% of Honda’s and 9% of Toyota’s were “reportedly” fleet. I say “reportedly” with respect to Honda and Toyota because some of their fleet sales go unreported. Dealers can sell cars to fleets but they get counted as retail. The industry term for these kinds of sales is “fleetail”. The dealers can collect retail incentive money on these which they can’t on “official” fleet sales. Also fleetail sales count as retail toward their sales quotas, contests, and sales awards. Dealers are inclined to sell fleetail cars at or even below cost because of this. We don’t know how many Honda and Toyota retail sales are truly retail and which are fleet/fleetail.
Here’s why these fleet sales are bad for you. All of these cars that are sold to Hertz, Avis, and the US Government don’t just “vanish into thin air”. They come back on the used car market through auto auctions all over the USA. If you bought a Ford Focus this year and Ford also sold 20,000 Ford Focuses to the fleets, Ford caused your Focus to depreciate at a much higher rate than it would have otherwise. This is simply the economic law of supply and demand. The more used Focuses that Ford sells at the Manheim auctions in 2013 (the same year you are ready to trade yours in for a new car) the lower the price they have to sell them for. The bottom line is that that new car could cost you an extra $2,000 based on the lowered trade-in value of your Focus.
My advice to you is to carefully consider the number of fleet/fleetail sales the various manufacturers are making when purchasing your next new car. Chrysler is clearly the leader in fleet sales and I would avoid Chrysler products like the plague unless I planned to never trade it in. I’d lease a Chrysler product if I absolutely had to have one. You aren’t responsible for selling the used car at the end of the lease. Of course you already paid for the high depreciation in your lease payments unless Chrysler over estimated the residual which is possible. Ford and GM are also big fleet sellers. A good guide to consult is the industry “bible” for future used car values, called residuals. This is the Auto Leasing Guide, ALG. Every dealer and manufacturer has one. You can ask your dealer to see his copy (If he won’t just email or call me). This guide is the best estimate of what a new car bought today will be worth in 1, 2, 3, 4, 5, or even 6 years.
Monday, October 18, 2010
Good People Make Good Car Dealerships
In my columns over the years I’ve always advocated carefully choosing the car dealership that you buy your vehicle from or allow to service it. I still believe this is important. In fact, I recently published a list of dealers that I recommend you buy your car from and a list that I recommend you avoid. We’ve all visited a restaurant or retail store and had a terrible experience with a waitress, sales person, or other employee and never returned. Yet, we’ll friends recommending the same store that we swore never to patronize. We condemned an entire company because of one person.
I also wrote a column a couple of years ago in which I suggested that you carefully choose the individual who advises you and sells you service on your car. These individuals are really commissioned sales people who sell you service just like car sales people sell you cars. Unfortunately most dealerships call them something else like “assistant service manager” or service advisor. In my dealership we used to call them Assistant Service Managers because that’s the term that Toyota uses. We now call them “service advisors” because too many people thought they were dealing with the service manager. In all candor, I’d feel more comfortable naming them what they are, “service sales people” and I may make that change.
As I was rereading this old column, it occurred to me that the same recommendation applies to all companies, not just car dealerships and it applies to all departments in a company. Whichever car dealership you choose, take the time to pick and choose those individuals you deal with. Car dealerships, just like other organizations, are nothing more than the sum of their parts…their people. You should get to know the person who sells you service and, if you don’t like him, ask for another person to handle your service requirements. You should also meet and cultivate a manager in the service department.
The same holds for the sales department. When you buy a car, don’t settle for the first salesman who approaches you. For example, if you’re a woman you may feel more comfortable dealing with another woman. Or, if your native language is Spanish or Cajun, you may feel more comfortable with one who can converse with you in your native tongue. Don’t be shy about asking and don’t feel bad about hurting the feelings of the first sales person. An automobile is the 2nd largest purchase most people make and it’s very important that you feel comfortable with the person selling it to you. Furthermore, if after dealing with your sales person for a while, you think you made a bad choice, ask to speak to the sales manager or general manager. Believe me, car buyers hold all the cards in today’s shaky economy and no sane sales manager is going to lose a sale because a prospective customer doesn’t like or trust the sales person she’s dealing with. He will handle your sale personally or choose another sales person you do feel good about.
Car dealerships have other departments including parts, finance and insurance, accounting, and some have body shops. My same recommendation applies to all departments. A word of caution, when you ask to speak to a manager, be sure you’re really are truly speaking to one. Car dealerships are notorious for calling rank and file employees managers to trick the customer.
My purpose in writing this column is in realization of the fact that there are no perfect companies, especially car dealerships and that includes mine. I employ 130 individuals and I would be less than candid if I didn’t say I have a few rotten apples in my barrel. Unfortunately, I don’t know who they are and finding them is a continuous work in progress. The same thing applies to all companies including car dealerships. In my list of recommended dealers, there are some employees of those dealerships who would take advantage of you but most would not. In those dealerships that I recommend you don’t buy your car from, there may be a few honest, courteous employees. Then there are all the dealerships that I don’t put in either category. Your odds of finding the right individual are much better if you patronize a good company or car dealership, but don’t totally let your guard down.
Just stay away from the ones that I recommend you don’t deal with. In every organization there’s a tipping point. A great company reaches a critical mass of good employees and as their reputation grows, more good employees from other companies seek to be employed there. Honest, hardworking, courteous people enjoy working in an environment where others are like them. The same holds true for evil dealerships and bad companies (those on my “don’t buy” list). A good person with a conscience has a very difficult time functioning in an environment where, from top management all the way down, the design is to trick and take advantage of customers. These few good people don’t last long in evil dealerships and flee to a place where they can treat their customers in a manner that lets them sleep at night.
I also wrote a column a couple of years ago in which I suggested that you carefully choose the individual who advises you and sells you service on your car. These individuals are really commissioned sales people who sell you service just like car sales people sell you cars. Unfortunately most dealerships call them something else like “assistant service manager” or service advisor. In my dealership we used to call them Assistant Service Managers because that’s the term that Toyota uses. We now call them “service advisors” because too many people thought they were dealing with the service manager. In all candor, I’d feel more comfortable naming them what they are, “service sales people” and I may make that change.
As I was rereading this old column, it occurred to me that the same recommendation applies to all companies, not just car dealerships and it applies to all departments in a company. Whichever car dealership you choose, take the time to pick and choose those individuals you deal with. Car dealerships, just like other organizations, are nothing more than the sum of their parts…their people. You should get to know the person who sells you service and, if you don’t like him, ask for another person to handle your service requirements. You should also meet and cultivate a manager in the service department.
The same holds for the sales department. When you buy a car, don’t settle for the first salesman who approaches you. For example, if you’re a woman you may feel more comfortable dealing with another woman. Or, if your native language is Spanish or Cajun, you may feel more comfortable with one who can converse with you in your native tongue. Don’t be shy about asking and don’t feel bad about hurting the feelings of the first sales person. An automobile is the 2nd largest purchase most people make and it’s very important that you feel comfortable with the person selling it to you. Furthermore, if after dealing with your sales person for a while, you think you made a bad choice, ask to speak to the sales manager or general manager. Believe me, car buyers hold all the cards in today’s shaky economy and no sane sales manager is going to lose a sale because a prospective customer doesn’t like or trust the sales person she’s dealing with. He will handle your sale personally or choose another sales person you do feel good about.
Car dealerships have other departments including parts, finance and insurance, accounting, and some have body shops. My same recommendation applies to all departments. A word of caution, when you ask to speak to a manager, be sure you’re really are truly speaking to one. Car dealerships are notorious for calling rank and file employees managers to trick the customer.
My purpose in writing this column is in realization of the fact that there are no perfect companies, especially car dealerships and that includes mine. I employ 130 individuals and I would be less than candid if I didn’t say I have a few rotten apples in my barrel. Unfortunately, I don’t know who they are and finding them is a continuous work in progress. The same thing applies to all companies including car dealerships. In my list of recommended dealers, there are some employees of those dealerships who would take advantage of you but most would not. In those dealerships that I recommend you don’t buy your car from, there may be a few honest, courteous employees. Then there are all the dealerships that I don’t put in either category. Your odds of finding the right individual are much better if you patronize a good company or car dealership, but don’t totally let your guard down.
Just stay away from the ones that I recommend you don’t deal with. In every organization there’s a tipping point. A great company reaches a critical mass of good employees and as their reputation grows, more good employees from other companies seek to be employed there. Honest, hardworking, courteous people enjoy working in an environment where others are like them. The same holds true for evil dealerships and bad companies (those on my “don’t buy” list). A good person with a conscience has a very difficult time functioning in an environment where, from top management all the way down, the design is to trick and take advantage of customers. These few good people don’t last long in evil dealerships and flee to a place where they can treat their customers in a manner that lets them sleep at night.
Monday, October 04, 2010
Ten New Year’s Resolutions for Car Dealers in 2011
This is a modified version of the same column I wrote last year. Unfortunately it applies very well to this year for two reasons: (1) The economy has not improved as we had hoped and (2) Car dealers did not abide by my suggested new year’s resolutions for 2010. In fact, car dealers have gotten worse. For example, we now have Ft. Pierce Nissan and Delray Mazda-Kia (both owned by Mike Grieco) double-charging for freight on new cars in addition to their dealer fee. Napleton Nissan in Rivera Beach was also double charging for freight but recently stopped. Somebody once said that the best antiseptic was sunlight and that’s why I never give up on bringing things like this to the attention of my readers.
2009, with the exception for August [Cash for Clunkers] will go down as a 2nd bad year in a row for our economy and especially for car dealers. 2010 is has also been a very tough year for car dealers in Florida and especially on the Treasure Coast and Palm Beach County. I’ve been a dealer for over 40 years. I say that because I don’t want those dealers who read this to think I’m “kicking them while they’re down” by preaching redemption. I’m suggesting these resolutions because they can help these dealers survive these bad times and prosper even more when business returns to normal.
(1) Eliminate your dealer fee. We’ve seen some progress in dealers eliminating their dealer fees in Palm Beach County. Palm Beach Toyota and Royal Palm Toyota dropped their dealer fee in June and Royal Palm Nissan dropped theirs in November. This was due, not to a “moral revelation” by the dealer or legislative action but economic pressure. Palm Beach Toyota and Royal Palm Toyota are my two nearest competitors. Six years ago, when I eliminated my dealer fee, Royal Palm Toyota did not exist and Palm Beach Toyota was outselling my dealership by a wide margin. Now I outsell both dealerships combined. Hopefully other dealers can learn from this economics 101 course, Ethical Business Practices Equal Increased Business. Quote your customers the full, out-the-door price. The only additional costs passed to your customer should be federal, state, or local taxes and/or fees like Florida sales tax. This is the generally accepted practice in retailing all other products and services. A price is quoted to your customer when you communicate a price in any fashion including advertising a price in the newspaper, radio or TV, painting a price on a windshield or sign, saying a price over the phone or in person, or giving a price over the Internet. Your “dealer fee” is profit for you. It is not a “fee” and it should be included in your price.
(2) The buck stops with you. You are responsible for the actions of your employees. Your salesmen, service technicians and service advisors are virtually all paid on commission. If you do not police your people and hire ethical people your customers will be taken advantage of. If you are an absentee owner, as most owners of car dealerships are in South Florida are, you have to have someone running your store that knows and cares about what is happening to your customers. Your ignorance of the mistreatment of your customers is no more an excuse than being ignorant of a law when you break it. You may think you know how your employees are treating your customers, but I promise you that you don’t unless you communicate directly with some of them. You cannot rely exclusively on reports from your managers to tell you the truth.
(3) Don’t advertise a car at a price that you don’t want to sell it for. If you advertise a car for a specific price, you should be willing and able to sell that car to as many customers as respond to the ad. If you run out of stock, give the customer a rain check. Also, pay your salesmen a commission on the ad cars. Now most of you don’t pay a salesman a commission if he sells the ad car. What do you think that salesman is going to tell the customer who comes in on the ad? If you run out of that model, you should give your customers a rain check. When you don’t do that, it’s called “bait and switch”.
(4) Don’t insist or encourage your customers to buy and take delivery of their car on the same day. This is called a “spot delivery” in the trade. There are lots of thing bad about this. A car is the 2nd largest purchase a person makes. The customer should be allowed time to reflect and think about this decision. Cars are often spot delivered when the credit has not been approved, especially nights and weekends when the banks are closed. Customer often have to be called back to sign another contract at higher payments, higher interest, and/or higher down payments. This is sometimes done deliberately because customers are often too embarrassed to tell their friends that they really haven’t bought that shiny new car they were showing off. Attorneys in other states have filed class action suits against car dealers and attorneys in this state are working on doing the same.
(5) Give customers who are” just looking” a price when they ask for it. It’s insulting to today’s sophisticated buyers to be told when they ask for the price that they can buy the car for, that they have to make an offer in writing with a deposit first. It’s also insulting when you tell the customer that you won’t give her a price until she’s “ready to buy”. Can you imagine being told this by a salesman at Best Buy when you asked the price of 50” Plasma TV? Your salesmen won’t give prices to your customers because they are afraid the customer will compare his price with the competition. This is what the free market place is all about! Customer should shop and compare. If you treat your customers with respect, integrity, and courtesy, they will return to you an offer you the right to meet or beat a lower price.
(6) Don’t advertise discounts from “dealer list” price. When you mark up the manufacturer’s list price by thousands of dollars and then advertise a discount, you are misleading you customers. The federal government has a law that every new car displays a “Monroney label” [named after the U.S. senator who sponsored this bill] on the window when it is sold. The reason for this law is to give car buyers a fair, even basis for comparing prices between different dealers. By confusing your customers between “dealer’s list” and “manufacturer’s list” you are circumventing the law.
(7) Don’t advertise lease payments that require large down payments hidden in the fine print. Most people lease cars to minimize their monthly payment. When your customer comes in on the ad finds out she has to pay $4,000 cash down to get the lease payment you advertised, it’s just plain wrong. There are some dealers who actually advertise prices with a qualification that the customer pays an additional sum first to get the advertised price.
(8) Do not advertise that you can get anybody financed no matter how bad their credit. This is not true and just plain cruel, especially during these terrible economic times with very tight credit.
(9) Don’t guarantee the lowest price with qualifications that cannot be met. Your qualifications are usually that you “reserve the right to buy the other car from the other dealer who beat your price” and that the customer must have a signed buyer’s order from the other dealership. You know that the other dealer will never agree to sell you that car and you also know that the chances of the customer getting out of the dealership with a signed buyer’s order without taking delivery are slim and none. Dealers reading this, I dare you to show me evidence that you have honored your guarantee with jus one customer. I’ll make you a bet that you have never honored that guarantee.
(10) Don’t offer a minimum $10,000 [or some other high number] for every trade-in. Sometimes these ads, say “if you can push, pull, or drag your old car in we will give you at least $10,000 toward the purchase of a new car. You then mark up the new car so high, you are not really offering the customer anything more than the wholesale value, if that.
2009, with the exception for August [Cash for Clunkers] will go down as a 2nd bad year in a row for our economy and especially for car dealers. 2010 is has also been a very tough year for car dealers in Florida and especially on the Treasure Coast and Palm Beach County. I’ve been a dealer for over 40 years. I say that because I don’t want those dealers who read this to think I’m “kicking them while they’re down” by preaching redemption. I’m suggesting these resolutions because they can help these dealers survive these bad times and prosper even more when business returns to normal.
(1) Eliminate your dealer fee. We’ve seen some progress in dealers eliminating their dealer fees in Palm Beach County. Palm Beach Toyota and Royal Palm Toyota dropped their dealer fee in June and Royal Palm Nissan dropped theirs in November. This was due, not to a “moral revelation” by the dealer or legislative action but economic pressure. Palm Beach Toyota and Royal Palm Toyota are my two nearest competitors. Six years ago, when I eliminated my dealer fee, Royal Palm Toyota did not exist and Palm Beach Toyota was outselling my dealership by a wide margin. Now I outsell both dealerships combined. Hopefully other dealers can learn from this economics 101 course, Ethical Business Practices Equal Increased Business. Quote your customers the full, out-the-door price. The only additional costs passed to your customer should be federal, state, or local taxes and/or fees like Florida sales tax. This is the generally accepted practice in retailing all other products and services. A price is quoted to your customer when you communicate a price in any fashion including advertising a price in the newspaper, radio or TV, painting a price on a windshield or sign, saying a price over the phone or in person, or giving a price over the Internet. Your “dealer fee” is profit for you. It is not a “fee” and it should be included in your price.
(2) The buck stops with you. You are responsible for the actions of your employees. Your salesmen, service technicians and service advisors are virtually all paid on commission. If you do not police your people and hire ethical people your customers will be taken advantage of. If you are an absentee owner, as most owners of car dealerships are in South Florida are, you have to have someone running your store that knows and cares about what is happening to your customers. Your ignorance of the mistreatment of your customers is no more an excuse than being ignorant of a law when you break it. You may think you know how your employees are treating your customers, but I promise you that you don’t unless you communicate directly with some of them. You cannot rely exclusively on reports from your managers to tell you the truth.
(3) Don’t advertise a car at a price that you don’t want to sell it for. If you advertise a car for a specific price, you should be willing and able to sell that car to as many customers as respond to the ad. If you run out of stock, give the customer a rain check. Also, pay your salesmen a commission on the ad cars. Now most of you don’t pay a salesman a commission if he sells the ad car. What do you think that salesman is going to tell the customer who comes in on the ad? If you run out of that model, you should give your customers a rain check. When you don’t do that, it’s called “bait and switch”.
(4) Don’t insist or encourage your customers to buy and take delivery of their car on the same day. This is called a “spot delivery” in the trade. There are lots of thing bad about this. A car is the 2nd largest purchase a person makes. The customer should be allowed time to reflect and think about this decision. Cars are often spot delivered when the credit has not been approved, especially nights and weekends when the banks are closed. Customer often have to be called back to sign another contract at higher payments, higher interest, and/or higher down payments. This is sometimes done deliberately because customers are often too embarrassed to tell their friends that they really haven’t bought that shiny new car they were showing off. Attorneys in other states have filed class action suits against car dealers and attorneys in this state are working on doing the same.
(5) Give customers who are” just looking” a price when they ask for it. It’s insulting to today’s sophisticated buyers to be told when they ask for the price that they can buy the car for, that they have to make an offer in writing with a deposit first. It’s also insulting when you tell the customer that you won’t give her a price until she’s “ready to buy”. Can you imagine being told this by a salesman at Best Buy when you asked the price of 50” Plasma TV? Your salesmen won’t give prices to your customers because they are afraid the customer will compare his price with the competition. This is what the free market place is all about! Customer should shop and compare. If you treat your customers with respect, integrity, and courtesy, they will return to you an offer you the right to meet or beat a lower price.
(6) Don’t advertise discounts from “dealer list” price. When you mark up the manufacturer’s list price by thousands of dollars and then advertise a discount, you are misleading you customers. The federal government has a law that every new car displays a “Monroney label” [named after the U.S. senator who sponsored this bill] on the window when it is sold. The reason for this law is to give car buyers a fair, even basis for comparing prices between different dealers. By confusing your customers between “dealer’s list” and “manufacturer’s list” you are circumventing the law.
(7) Don’t advertise lease payments that require large down payments hidden in the fine print. Most people lease cars to minimize their monthly payment. When your customer comes in on the ad finds out she has to pay $4,000 cash down to get the lease payment you advertised, it’s just plain wrong. There are some dealers who actually advertise prices with a qualification that the customer pays an additional sum first to get the advertised price.
(8) Do not advertise that you can get anybody financed no matter how bad their credit. This is not true and just plain cruel, especially during these terrible economic times with very tight credit.
(9) Don’t guarantee the lowest price with qualifications that cannot be met. Your qualifications are usually that you “reserve the right to buy the other car from the other dealer who beat your price” and that the customer must have a signed buyer’s order from the other dealership. You know that the other dealer will never agree to sell you that car and you also know that the chances of the customer getting out of the dealership with a signed buyer’s order without taking delivery are slim and none. Dealers reading this, I dare you to show me evidence that you have honored your guarantee with jus one customer. I’ll make you a bet that you have never honored that guarantee.
(10) Don’t offer a minimum $10,000 [or some other high number] for every trade-in. Sometimes these ads, say “if you can push, pull, or drag your old car in we will give you at least $10,000 toward the purchase of a new car. You then mark up the new car so high, you are not really offering the customer anything more than the wholesale value, if that.
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