Earl and Nancy: Fired from Radio Show...

...Raising Issues of Journalistic Ethics and Censorship

 Last Tuesday Earl Stewart on Cars, my weekly radio show which ran on Seaview Radio in North Palm Beach for nearly 7 years, was abruptly canceled.  Ed Morse Honda had threatened to cancel his advertising on Seaview unless Nancy and I were fired. One of the Seaview broadcasters (William is a pseudonym)  sent me an e-mail which you can read below with my response. I chose this as the clearest way to explain both my position and those of the Seaview owners and management. Read both sides and you be the judge. If you agree with me, please email or voice your views to the Seaview executives for the reinstatement of Earl Stewart on Cars.

Seaview Executive Contact Information:

Chet Tart, general manager

561 378-5503

Chet@seaviewradio.com

Jim Martin, owner

941 855-1111 or 207 767-1294

Intermartbc@comcast.net 

Tricia Woods co-owner

swfradio@aol.com

Email Exchange with "William":

William: Earl...although we only met twice, I really enjoyed meeting you, and I really like you.    And I understand your frustration and anger at Seaview for what they did.   I saw Chet Tart just a short time after he met with you as I was in the station to do my show that night.  I can tell you that he was not happy about what had happened, although he knew it was the right decision for the station.   This email is between you and me....Chet has no idea I'm sending it.   So this is not his point of view. 

Earl: I agree that Chet was not happy about firing me and he told me that last Tuesday afternoon in my office. He told me that “the owners of Seaview, Tricia and Jim” had made the decision and he had no other choice. However, although I believe Chet told you that firing Nancy and me was the right decision to make, I don’t believe that he truly believes that. Chet is “following orders”. At this stage of his life, he can’t afford to be job hunting. 

William: I'd just like to give you some thoughts that you may not have considered.    While I was not here when you started your show, I believe that it started out as a consumer friendly show, with helpful hints on car buying and maintenance, and other auto news.  I enjoyed listening to it.  Over time, you got into your "secret shopper" thing, and I think that Seaview probably didn't recognize it as the danger that it was. 

Earl: My show started out 7 years ago and was, until my last show, a “consumer friendly” show, but it was never a “car dealer friendly” show. I think this is the false story you’re being fed by Chet and maybe others at Seaview who are desperately trying to hang onto their jobs. Sharing the truth can get them fired. You can ask any one of my regular listeners if my show was ever just “helpful hints on car buying, maintenance, and auto news”. You can also ask the Gary Todd or Dick Farrell, (I’ll provide you with their contact information if you like) who worked with Nancy and me at the very beginning what kind of a show it was at the beginning. They are no longer employed by Seaview and can freely tell you the truth. If you have the time, I’ll send you a recording from some of my old shows. They are every bit as objective and critical of car dealers as all of my recent shows. Yes, the mystery shopping report was not on the show from the beginning but it has been for several years. We tried it one time and it became hugely popular. Listeners would call in to complain when we didn’t have time to get to the mystery shopping report. 

William: See, there is a difference between an investigative reporter, and a personality that owns a business.   If the investigative reporter spills the beans on some bad practices of a business, he has no vested interest in it.   The station might take some heat for it, but they would have made their decision before it went on the air whether to do it or not. 

Earl: I should not be banned as a consumer advocate because I happen to own a car dealership. I totally divorce my “car dealer persona” from all of my consumer advocate rolls. My book, Confessions of a Recovering Car Dealer, my weekly blog, my weekly column for Hometown News, my continuous speaking tours at public libraries, Rotary and Kiwanis Clubs, Condo Associations, schools, churches, synagogues, and my former radio show. I rarely ever mention my car dealership and, when I do, it’s only when asked or to give full disclosure. I never, ever try to sell anybody a Toyota when I wear my consumer advocate hat. The media widely accepts my consumer advocate roll. Last week I appeared as a consumer advocate on national TV, ABC News regarding illegal and unethical car practices by car dealers. Over the years I’ve been quoted and appeared in any number of national medium…CNN, Fox News, Wall Street Journal, NY Times, USA Today US News and World Report, The Geraldo Rivera Show, as well as local TV and radio. You say “there is a difference between an investigative reporter and a personality that owns a business”. I totally agree, one difference is that an investigative reporter who also has owned and operated a business for 46 years knows a lot more about that business than an investigative reporter who never sold a car. That’s what makes me unique because I know where “all the bodies are buried”. In fact, I buried a few of those bodies myself and hence my book…”Confessions of a Recovering Car Dealer”. “I’ve been there and done that” and that’s why unethical dealers fear me so. If I wasn’t telling the truth, can you explain why, over seven years, not one single car dealer has sued me for slander? Furthermore, my dealership is a model of ethics and integrity among car dealerships. “Let him who is without sin cast the first stone, and he who lives in a glass house shouldn’t throw stones.” I must be without sin because I do live in a glass house and the car dealers of South Florida would be all over me like a cheap Kmart suit if I wasn’t practicing what I preach.

 William: With a show hosted by the most recognized car dealer in Palm Beach, you do have a vested interest.  When you say disparaging things about Ed Morse or another dealer, the implication is that a customer would never see those things happening at your dealership.  That may be true, but it's a viewpoint that certainly is biased.  It's human nature.  We all think our company is the best.  Yours probably is.  

Earl: I would be hypocritical not to admit that my radio show brought me tons of business. I’m not sure what you mean by saying that it may be true that my dealership doesn’t rip off customers like Ed Morse but that viewpoint is biased.” How can something be true and biased? Check your Webster’s. 

William: In your book, you mentioned that while you have tried hard over the years to weed out bad employees, every once in a while you find a bad one and you deal with it.   Now just think if Seaview had the owner of Ed Morse on the air talking about something bad that happened at your dealership.   I don't think you'd be happy.  You might even pull your ads.   I wouldn't blame you if you did.  I've had many advertisers over the years who pulled their ads because they didn't like what was on the air or in print.   When that happens, the station or paper in question needs to assess the situation and see if the person pulling their ads has a valid point.  If you had a column in the Palm Beach Post and you wrote negative things about Ed Morse Honda, I bet they'd have a word with you, too. 

Earl: I do have bad employees working for me. I have between 140 and 150 employees working for me and there are always a few rotten apples in a barrel that big. I encourage anyone to tell me about my rotten apples including callers to my radio show. If you were a regular listener, you would know that customers of mine will occasionally call in and criticize their treatment at my dealership. I encourage them to talk and explain in detail their bad experience. I then sincerely apologize and promise to investigate, make it right, coach the person(s) responsible and correct the processes that allowed it to happen. Many are amazed that I, not only allow, but encourage callers to criticize me and/or my dealership. People are also amazed that I regularly encourage car dealers and car dealership employees to call in. I promise to allow them all the time they need and not mute them, talk over them, or disconnect them. Some have taken me up on this but not too many. Not only is this the right thing to do, but it’s very good radio and builds my listener base. 

William: I did not hear what you said about Ed Morse Honda, but from your comment on facebook, it's obvious that you don't like their business practices.    Knowing you, I bet your instincts are correct.   But that doesn't mean that a radio station has to give you the podium to make negative comments about their other advertisers....the ones who pay the bills.   

Earl: I said very little about Ed Morse; it was a caller, Frank Nash, who called the show after Ed Morse Honda refused to sell him a new Honda at the advertised price. Ed Morse Honda also added the dealer fee to the price which is a violation of state law. If you would like to speak to Frank Nash, his phone number is XXX-XXXX (redacted). If Frank Nash or I slandered Ed Morse Honda, he has his remedy in the courts, but as you know “truth is the perfect defense against slander and libel”. I would agree that Seaview shouldn’t give me a podium to say negative things about a car dealer if they were untrue. But are you saying that they should censor my efforts to report illegal practices by a local car dealer? 

William: The good news is that in this age of new technology, you are not limited to licensed radio and TV stations, or newspapers, to get the word out.  You have a blog.  You have a website. You are on facebook.   You can do a "radio" show online and as a podcast.  Someone mentioned a national radio show.   I will tell you that everything you talk about EXCEPT the bad business practices of West Palm Beach car dealers is of interest to a national audience. 

Earl: William, bad business practices of WPB dealers may not be of interest to a national audience if that’s all they heard every week. But bad business practices by a local car dealer in Minnesota were of great interest to a national audience, ABC Lookout, with Brian Ross. I appeared on that expose and the show had very high ratings. You must know enough about what radio, TV, and all media audiences prefer to understand that “how to properly maintain your car” is trumped by “how not to get ripped off by your local car dealer”. Ask some of your friend what they think about their experiences with car dealers in buying and servicing. Answer this question…Why do car dealers perennially appear dead last on the Gallup “Honesty and Ethics in Professions” survey? There’s nothing the TV and radio audiences would rather see and hear than bad guys being exposed. 

William: Someone mentioned that you could buy the radio station.    Let's say you did want to buy a radio station here.    If you did, how many of your competing car dealers do you think would spend money with you?   Zero!   They wouldn't want to give you their money. 

Earl: Jim Martin and Tricia Woods have asked me to buy their station, but I declined. This may be one more reason they don’t want me on their station anymore. I declined because my objectivity would be questioned if I was the owner of the station that aired my views. I also declined because I know nothing about broadcasting and I didn’t like the potential ROI after looking at the financials. 

William: I think you have every right to say what you do about other dealers.  But there are consequences when you do that.   Nobody is under any obligation to give you the microphone or ink to do it.  If you want to continue doing this, you're going to have to find your own podium.  Fortunately, in this day and age, it's a lot easier. 

Earl: I’m not sure you’re right about there being no obligation by Seaview to allow my show to continue. My show is a community service show. The airwaves are owned by the people and the FCC and FTC have laws to protect the people. The FCC says that radio and TV stations must devote a certain amount of their use of the airwaves to serve the public and the FTC says that when groups of businesses conspire to harm or eliminate another business it is an illegal boycott. 

William: If you'd like to talk about this some more, I'd be happy to meet with you or talk on the phone.    If you don't like my message, I understand.  But you seem like a really great guy, and I wanted you to look at the entire picture.   I remember the times my heart was broken buy a girl who broke up with me.  It hurts.  But after a while, it makes you strong. 

Earl: I’ll be happy to meet with you or talk on the phone, but I’ll be very busy this coming week, as you can imagine. 

William: Try to hold back your anger, and rise above it.  Seaview is a great little radio station, and Chet has been great to me.   But the name Earl Stewart is better known in Palm Beach County than Seaview Radio.   I can't say that about William.    I think you can make this into a positive. 

Earl: Thanks for your advice on anger management but Chet will tell you that I wasn’t angry when he fired me last Tuesday. I’m disappointed in the owners of Seaview, but fully understood that Chet did what he had to do. If I were Chet Tart, I would have done exactly the same thing. I also think he’s “following orders” when he denies the truth of why I was fired. I’m getting feedback from my listeners who have called and spoken to Chet, Jim Martin, Mike Balsamo, and others that I’m lying about why I was fired. I believe that even Jim Martin may be misinformed and that Tricia Woods was the architect forcing Chet to fire me. You said in your email that the reason my show was canceled was that it had gradually become more and more anti dealer. This is not true. My show’s theme song is the theme from “The Good the Bad and the Ugly” (Nancy’s idea) and that’s what we do. We tell good stories about dealers when they happen albeit all too infrequently. What is true is that Seaview has found it difficult to sell advertising to car dealers for some time. Braman, Napleton, Arrigo, Schumacher, and Ed Morse have all threatened Seaview and most have canceled their ads. Ed Morse was the straw that broke the camel’s back. 

I believe that Tricia Woods made a very bad management decision. Looking at advertising revenue from one business group as the most important thing to the survival of Seaview is shortsighted. The heart of a radio station’s long run survival is their listener base. When the smoke settles the listeners will decide if Seaview survives. A lot of those listeners don’t like the way Seaview treated Earl and Nancy Stewart. As the word continues to get out, and this is my main mission over the next few months, more and more of Seaview listener will know the truth. Seaview’s listener base could be even further eroded should negative facts develop and be made public if litigation ensues.    

Fired!

Earl Stewart forced off the air at Seaview Radio by disgruntled competing car dealers who threated to pull their advertising if Stewart wasn’t muzzled

Earl Stewart, who has for the past seven years hosted the Seaview Radio show Earl Stewart on Cars with his wife Nancy Stewart – has been forced off the air by Seaview, bowing to threats from competing car dealers to pull their advertising from the station.  His show has been cancelled immediately, according to Seaview Station Manager Chet Tart.  The decision was made by Seaview owners Jim and Tricia Woods (correct?) in response to the threats to their advertising income.

Each Saturday from 9 – 10 a.m. on Seaview  (960 a.m., 95.9 FM and 106.9 FM), Stewart answered calls from listeners on everything from how to buy a car without getting ripped off, to how to service a car, get the most our of a lease, and other consumer oriented questions.  One of the most popular weekly segments is the “Mystery Shopper” where a listener visits a local car dealership and reports back to the audience on their experience.  From these experiences and listener feedback, the show developed a “good car dealer” and “bad car dealer” list.

Last week, one caller reported on a bad salesexperience at Ed Morse Toyota.  When the owner of Ed Morse heard about the unfavorable report on the radio show, he called the owners of Seaview Radio and threatened to pull his advertising from the radio station if Stewart’s show wasn’t cancelled.  He said that other car dealers would join him in this effort to silence Stewart by also pulling their ads from the Palm Beach Gardens-based radio station.  

Stewart has been a vocal advocate for consumer rights and has promoted changes in the way car dealers do business, leading a statewide effort to abolish or limit dealer fees in Florida, expose scams such as paying for nitrogen in tires, and more.  In September Stewart was featured on ABC Network news’ The Lookout as an honest car dealer commenting on unethical car deal techniques.

“It’s a sad day for consumers when a radio station cancels one of its most popular programs simply for telling the truth to the public,” Stewart said. 

Don’t Be “Flipped” to a Lease

One of the most popular weapons in car dealers’ arsenals is the infamous “lease flip”. This is car dealer jargon for switching a customer who originally intended to buy a car to leasing the car.

Of course the motivation to do this is more profit for the dealer and a bigger commission to the salesman.  That’s not to say that leasing a car is always more costly than buying one, but it can be if you’re not careful. And not being careful is exactly what happens when a purchase intender becomes a lessee.

Here’s how it happens. You come into the dealership to buy a car. You may have seen the dealer’s advertisement in the newspaper or TV for a particular model. More than likely you are prepared to make a down payment and/or trade in your old vehicle. You have a monthly payment in mind because almost everybody has a budget and we usually translate most purchases into whether or not we can fit them into our monthly budgets. You negotiate the best price you can to buy the car, or maybe the sale price is good enough.

Now the salesman or more often the F&I manager/business manager tells you what your monthly payment will be. Let’s say that you have a trade-in worth $15,000 and aren’t going to put any cash down. The F&I [Finance and Insurance] manager tells you your monthly payment will be $427 per month. But that’s way more than you can afford and you tell him you can’t buy the car because you can’t afford that big a payment. He asks you how much you can afford and you tell him it must be under $350 per month. Now he has you set up perfectly for the “lease flip”.

“Mrs. Smith, I think I have just the right thing for you. What would you say if I told you that you can drive that new car home today for just $349 per month?” You say, “With glee, you say we have a deal!” Guess what? You’ve just been flipped. If you had bought the car at the advertised price or negotiated a very good price, the dealer probably would have made about $1,000 profit. and the salesman would have made about a $200 commission. Not that you’ve let yourself be flipped to lease, the dealer could be making $15,000 and the salesman could be making a $3,000 commission!

I’m not exaggerating. I get calls weekly from victims of lease flips. Many of the callers are elderly and many of them are widows who never bought a car before, but had relied on their husbands. There’s no law that limits the profit that a dealer can make when he sells or leases a car. $10,000, $15,000, and even $20,000 profits are made and usually on leases. The dealers can do this by using the trade-in as a capital cost reduction on the lease but allowing less for the trade than it is actually worth. In the example above, your trade-in may be worth $15,000 but you were allowed only $5,000 to reduce the capitalized costs of the lease. Also, the dealer could have raised the price of the car you negotiated or the sale price to MSRP or even 110% of MSRP which is allowable by the leasing companies.

By manipulating the number of months of the lease and the down payment [capitalized cost reduction], a dealer can give you as low a payment as you ask for and still make an exorbitant profit. Most buyers are so focused on monthly payments that they don’t carefully analyze what they are agreeing to and signing. The shorter the number of months of a lease, the greater impact the down payment has on the monthly payment. A $5,000 down payment reduces the monthly payment on a 36 month lease by $139 per month, $208 on a 24 month lease, and $417 on 12 month lease.

Incredibly many victims of the lease flip, never thought about the fact that after the 12, 24, or 36 month term of the lease, they own nothing. After 36 months, a car with a good resale value should be worth about half of what you paid for it. Many people who have never leased before think they can bring their lease car back early if they want. Leasing is not renting and you can bring your car back early only if you make all of the remaining lease payments. If you had bought the car for $30,000 and financed it for 36 months, you would have about $15,000 in equity at the end of 36 months and no monthly payments. You were building equity with every monthly payment in the purchase but you were building zero equity with your 36 lease payments.

As I said before, don’t let this frighten you from ever leasing a car. Leasing can be a good choice and sometimes the best choice. You can find six articles I’ve written for Hometown News and for my blog at www.EarlStewartOnCars.com. “Lease a New Car before You Buy It”, “Car Leasing Booby Traps”, “Be Very Careful When Leasing a Car”, “The Lease Acquisition Fee…the Bank’s Gotcha”, “Buy or Lease Your Car at the Right Time of Year”, and “Should I Buy or Lease My Next Car?”

Auto Buying Services Can Be a Safer Way to Buy

Auto buying services are flourishing because buying a car is something that the average person dreads more than a root canal or a colonoscopy! You may be familiar with AutoTrader.com, AutoByTel.com, Cars.com, Costco, Sam’s Warehouse, and TrueCar.com. There are thousands of local, private brokers who will buy a car for you for a fee. There are also a lot of other organizations that provide auto buying services for their members. AAA, American Express, Consumer Reports, PenFed, Nationwide, GEICO, USAA  are just a few.  

The first thing to remember is that all auto buying services are in the business to make a profit. They are all “middle men” that you and/or the dealers pay fees to. Paying a fee raises the cost of the car to the dealer.  That means that if you are a shrewd negotiator who really does their homework you should be able to buy a car for as low a price as any auto buying service and save the cost of the fee.

Realistically, very few people are that good at negotiating. Remember that car salesmen and managers are professional negotiators. This brings to mind the old joke…”When you sit down at a poker game and look all around the table but don’t see a sucker. You’re the sucker!” Besides lacking professional negotiation skills, few people have the “thick skin” to be able to deal with the game-playing and insulting shenanigans of car salesmen and their managers. In addition to the “pain” of buying a car is the inordinate amount of time it can take.

I consider local, individual brokers as being the least efficient and trustworthy of all auto buying services. Most auto brokers are ex car salesmen. They charge you a fee and they often charge the dealer a fee too. A private broker’s fee is usually much higher than a national auto buying services. At my dealership I’ve paid brokers several thousand dollars to his customer and had to charge a lot more for the car than if the customer had come to me directly. The broker probably charged the customer a fee too. There are a few brokers who are trustworthy and won’t gouge their customers, but they are few and far between.

As far as all of the national buying services, it’s still “buyer beware”. My two favorites are TrueCar.com and Costco, but even with these two you should never let your guard down. The Costco program is administered by a separate company from Costco that is licensed by Costco to use their name. TrueCar is owned by a group of private investors and is new on the scene but are growing very rapidly. I’m signed up with TrueCar and Costco and I’m also a member of the TrueCar national dealer council. I do business with Cars.com, AutoTrader, and Autobytel.

The auto buying services advise you or the dealer of the price you should pay for the car. But, you have to remember that they don’t come into the dealership with you when you actually purchase the car. Even though I don’t recommend local car brokers, this is one advantage they have over national auto buying services. A broker will go into the dealership with you to assist you in the buying process or actually to the buying himself. If he is honest and his loyalty is to you, not the dealer, he can protect you from being tricked into paying more than you were told the price was.

This is the biggest problem with national auto buying services. Every service will, or should, give you the name of the salesman in the dealership that administers their program. They usually have more than one person, and you should be sure that you deal only with their designated representative. All too often, members of auto buying services and companies just walk into the dealership and say “I’m a Costco member and I want to buy a car at the special Costco price.” The person you are talking to is likely a commissioned sales person and he’s also likely to say, “Sure, I’ll be happy to sell you a car at the Costco price.” Of course, what happens is he sells you the car at the highest price he can because he’s paid 25% of the total profit he makes on that car. Never deal with anyone else at a car dealership except the designated member of that car buying service.

You should also know the auto-service quoted out-the-door price of the car you’re buying before signing the papers or taking delivery. One of the reasons I like TrueCar.com is that they give you that price before you ever go into the dealership. Costco does not give you the price but they require the car dealer to give you an official Costco price sheet for the specific car you’re buying. Unfortunately this doesn’t always happen. I recently mystery shopped a Costco dealer and they did not show my mystery shopper the Costco price sheet, but they said it was.

My definition of an “out-the-door price” is one that excludes only government taxes and fees.  All too often, the car dealers add their own fees which they variously refer to as doc fees, dealer fee, prep fee, administrative fee, dealer handling fee, electronic filing fee, etc. One of my gripes with TrueCar.com is that they give you a “TrueCar Price” but below that in the fine print they say “Dealer’s Name charges a $XXXX.00 Documentary Fee.” Be sure that you read your auto buying services quoted price very carefully including the fine print.

Another common trick by dealers is to add “dealer installed accessories” to the price quoted by the auto buying service. My advice is to never buy a dealer installed accessory, only factory installed. There are always exceptions to this but be very careful when making one. Dealer accessories are typically low cost items, virtually worthless with hugely inflated prices. Examples are nitrogen in tires, paint sealant, fabric coat, pin stripes, VIN’s etched in glass, and roadside assistance.

If you cannot get the dealer to agree to the price that was given you by the auto-buying service, leave the dealership, call your auto buying service, and report that dealer. Usually there are other dealers in your area who are also affiliated with the same buying service and they may recommend one of them. The auto buying service is paid by the dealer and that can be a problem. They have to keep the dealers happy so that they can make money. They like to keep the car buyers happy so that they will come back and tell their friends. The wise auto-buying service will realize that the best long term strategy is to put the car buyer over the dealer. The auto buying service’s first loyalty should be to the car buyer, not the dealer. This means that services should police their dealers and cull out those dealers who try to take advantage of car buyers by raising the agreed upon prices.

What is the “true” cost of that new car?

It is almost impossible for you to determine the true cost of a new car. This might sound crazy, but many dealers don’t know the true cost of their cars. The manufacturers and distributors invoice their dealers for an amount when they ship them a car that is almost always several hundreds of dollars more than the true cost. It’s fair to say that in virtually every case the “invoice” for a new car is much higher than the true cost. By true cost, I am referring to cost as defined by GAAP, generally accepted accounting principals.

You probably have heard about “holdback”. That is an amount of money added into the invoice of a car ranging from 1% to 3% of the MSRP which is returned to the dealer after he has paid the invoice. Some manufacturers include the cost of regional advertising in the invoice which offsets the dealer’s advertising costs. Another fairly common charge included in invoices is “floor plan assistance”. This goes to offset the dealer’s cost of financing the new cars in his inventory. Another is “PDI” or pre-delivery expense which reimbursed the dealer for preparing the car for delivery to you. I could name several more, depending on the manufacturer or distributor. Some of these monies that are returned to the dealer are not shown as profit on his financial statement and some are. Technically a dealer could say that the cost he showed you reflected all of the profit (by definition of his financial statement), but the fact would remain that more money would come to back to him after he sold you the car. To me, that’s called profit.

Besides holdbacks and reimbursements for expenses, you must contend with customer and dealer incentives when trying to figure out the cost of that new car. You will probably be aware of the customer incentives, but not the dealer incentives. Most dealers prefer and lobby the manufacturers for dealer rather than customer incentives just for that reason. Also, performance incentives are paid to dealers for selling a certain number of cars during a given time frame. These usually expire at the end of a month and are one reason why it really is smart to buy a new car on the last day of the month.

Last but not least, remember the “dealer fee”, “dealer prep fee”, “doc fee”, “dealer inspection fee”, etc. which is added to the price you were quoted by the salesman.. It is printed on the buyer’s order and is lumped into the real fees such as Florida sales tax and tag and registration fees. Most dealers in Florida (it is illegal in many states) charge this fee which ranges from $500 to $1,000. If you are making your buying decision on your perceived cost of the car, even if you were right, here is up to $1,000 more in profit to the dealer.

Hopefully you can now understand why it is virtually impossible to precisely know the cost of the new car you are contemplating buying. Most often the salesman and sales manager is not completely versed on the cost either. Checking the cost on a good Internet site like www.kbb.com or www.edmunds.com is about the best you can do. Consumer Reports is another good source. One reason that Internet sites don’t always have the right invoice price is that different distributors for cars invoice their dealers at different prices.

Do not make a decision to buy a car because the dealer has agreed to sell it to you for “X dollars above his cost/invoice”. This statement is virtually meaningless. As I have advised you in an earlier column, you can only be assured of getting the best price by shopping several dealers for the exact same car and getting an “out the door” price plus tax and tag only.

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 2^nd or 3^rd 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. 

BUY OR LEASE YOUR NEW CAR AT THE RIGHT TIME OF THE YEAR

The total cost of a new car consists of many factors including initial purchase price, maintenance and repairs, and insurance. One of the most often overlooked and biggest costs of owing a car is depreciation.  Some makes and models of cars depreciate more than others. By choosing the right make and model you can minimize depreciation. You can also minimize depreciation by properly maintaining your car, protecting it from the elements, and selecting the best color. One important factor in depreciation that is most often overlooked is the time of year that you buy or lease your car.

You should always buy your new car as soon as possible after that year model is introduced. Some would disagree, arguing that you can buy a car for less at the end of the model year. Even if this were so (and I don’t agree with this), the savings would not offset the increased cost of depreciation that you inherit by buying a new car that is a year old. If you follow the advice I have given in my previous columns on the smartest way to buy a new car, you can usually buy a new car for close to the same price at the beginning of the model year as at the end.

There was a time when virtually all makes of cars were introduced in the last quarter of the calendar year preceding the model year. If you bought a new model in September, you could be assured that you got it at the right time to minimize your depreciation. Nowadays, new models are introduced at almost any time and the introductions are nearly unpredictable. It’s not unheard of for a manufacturer to actually skip a model year entirely, selling last year’s model for another year. Or, sometimes a manufacturer will introduce a new model as much as two years before the calendar date of that model year. You should be sure you know exactly when that model year you are contemplating buying was introduced. You don’t want to buy a model year that was introduced 6 or 8 months ago

If you are leasing your car, you should also try to lease it as soon as possible after that year model is introduced. Also, when deciding on the length of the lease, your lease should end when the new model that you will lease or buy next is introduced. You don’t have to lease a car for a full one, two, three, or four years. You can lease a car for 39 months, for example, which may assist you in having your lease terminate at just the right time to buy or lease your next car.

Be sure you know how many more years the make and model you select will remain before it is replaced by a major model change. The life cycle of a particular model varies between manufacturers from as short as 3 years to as long as 6 or 7 years. Your car will retain its value considerably more if it is still within its current product cycle when you trade it in. You need to be especially wary when a specific model is discontinued entirely. Research this carefully and time your purchase or lease as early in the product cycle as possible.

 If you are buying a brand new model at the beginning of its product cycle, be sure that you are buying from a manufacturer that has a very good reputation for quality. You can get a pretty good idea of the quality of the new model by researching the reliability of the previous year model. It is true that a brand new model can experience some bugs during the early months of its first year. If you are nervous about this, it might pay to wait for 3 or 4 months after a brand new model is introduced to see if problems in the form of recall campaigns or otherwise do occur.

UNDERSTANDING YOUR NEW CAR WARRANTY

When you buy your new car your salesman will tell you that it has a “bumper to bumper” warranty. The most common coverage is for 3 years or 36,000 miles whichever should first occur. “Bumper to bumper” warranty sounds like it means that everything is covered. Unfortunately this is not the case. For example, your tires are not covered at all by the car manufacturer but under a separate warranty by the tire manufacturer.

It can be tedious, but the only way to completely understand your warranty is to actually read it. All warranties now are required to use the word “limited” unless there are absolutely zero exclusions and this, to the best of my knowledge, is never the case.

Some of the most common items that are mistakenly believed to be included in warranties are tires, rental car coverage, maintenance, and faded or damaged paint from various kinds of air contaminants.

I don’t know why all car manufacturers choose to exclude tires from their “bumper to bumper” warranties. After all, they choose the tire manufacturer just like they choose the manufacturer of other components on your car which they don’t manufacture themselves like the sound systems. The owner of a car has an established relationship with the service department of the dealership because she is bringing her car back every 5,000 miles or so for factory recommended maintenance. In most cases, she doesn’t even know who the tire dealer is. It would be far more customer friendly for the manufacturer to allow her dealer to handle warranty claims on tires. My suggestion is to ask your dealer’s service advisor or service manager to “broker” the warranty claim on your tires on your behalf. The dealership is more likely to have an established relation ship with a tire store and they can be your advocate.

New car warranties virtually never provide for a free rental car unless the vehicle must be tied up overnight for repairs. All too often, car salesman will promise you a “free loaner” anytime your car is in for service. Verify this with the service department before you rely upon it. There are extended service contracts which you can buy in addition to your new car warranty which will provide rental car coverage.

A new car warranty covers only “repairs” not maintenance items. A very common request is that a front end alignment be performed under warranty. Your alignment should have been checked before your car was delivered. If your car goes out of alignment after delivery, it is usually considered owner’s maintenance. Brakes are another item often misunderstood as being covered under warranty. Brake wear is almost always a maintenance item. Only a mechanical defect in your brakes is covered under warranty.

Faded or pitted paint can be from defective or improperly applied paint or from external causes like industrial fallout or foreign substances sprayed in the air (crop dusters or insect control airplanes). Of course there can be a good argument made that paint should have resistance to a certain amount of air pollution. This type of claim may require the inspection by a factory representative to determine the cause. From my experience, certain colors of paint seem to have more problems than others. Red and white come to mind. Ask the factory service representative if they have experience problems with your particular color. Stand your ground if you feel that the factory should stand good for faded or pitted paint. Get a second opinion from your insurance adjustor. You may even have an insurance claim. If you have your car washed and waxed regularly and keep it garaged it is highly unlikely that you will ever have a paint problem.

The manufacturer’s representative can authorize repairs to your car when it is out of warranty. This is called goodwill. Oftentimes the service manager of the dealership can also authorize goodwill repairs. This is a subjective ruling and depends on how close to being under factory warranty you are, how regularly you maintained the vehicle according to factory recommendations, how many cars of this make you have bought, and how you present your request. A car that is out of warranty by just a few miles or weeks can usually be covered under goodwill. If you maintained your vehicle regularly with your dealer and have bought several cars from this dealer, the further out of warranty you can expect goodwill repairs. Presenting your case in a positive, courteous manner helps a lot. Service managers and factory representatives have high pressure jobs and are often confronted by loud, rude, demanding customers. Your claim may be absolutely legitimate, but your chances of success are enhanced by being nice.

Some manufacturers offer longer warranties than others. The amount of time and number of miles that a vehicle is covered is important, but the quality of the vehicle is more important. Sometimes manufacturers will increase their warranty coverage to sell more cars because the quality of their cars is in question. Quality trumps length of warranty and I would always advise buying the higher quality rather than the one with the longest warranty.

Earl Stewart, the Consumer Advocate. Earl Stewart, the Car Dealer

For many years, I’ve worn two hats, one as a Toyota dealer and the other as an advocate for car buyers and owners of all brands. 

I take stringent measures to separate the two. As a consumer advocate for all car owners, I know that about 8 ½ out of 10 of all cars on the road are not Toyotas. Coming across as a Toyota dealer would appear to be self-serving and would cause me to lose all credibility and objectivity to the vast majority of car owners. Likewise, it would be unseemly for me, wearing my Toyota dealer hat, to remind my prospective customers that the Chevrolet Impala was rated higher than the Toyota Camry by Consumer Reports.

In my role as consumer advocate, I’ve written a book, Confessions of a Recovering Car Dealer, write a blog,  www.EarlStewartOnCars.com, tweet on @earloncars, post videos at www.YouTube.com/EarlOnCars, and write a column for the Hometown News. I also host “Earl Stewart on Cars”, a weekly radio show on WSVU, with my wife, Nancy. It’s a live call-in talk show that attracts one of the largest audiences in that time slot and car owners of all makes call me for advice and with their comments. I speak publicly all over South Florida at Chambers of Commerce, Rotary and Kiwanis Clubs, churches and synagogues, condo associations, public libraries and any other organization that asks me to speak. I’m proud to say that I’ve been invited to speak at the annual installation banquet meeting of the famous 82^nd Airborne Division this December 8. I’ve been interviewed and quoted often by the national media including CNN, Fox, ABC, NBC, CBS, the Wall Street Journal, USA Today, NY Times, Automotive News, US News and World Report, Fortune Forbes, and the Associated Press. I’ve lobbied for better laws and enforcement of existing laws with Florida politicians and I testified before the Florida Senate Commerce Committee in an effort to outlaw the dealer fee. I also work with the Florida Automobile Dealers Association, FADA, in efforts to create an enforceable code of ethics that can improve the sales practices, advertising and the image of Florida car dealers. 

As a consumer advocate, to be totally objective, I cannot exclude Toyota dealers, the Toyota distributor (Southeast Toyota), or Toyota Motor Sales/Toyota Motor Corp. from criticism. How would it look for me to point out problems with only Honda, GM, Ford, Chrysler, and other non-Toyota dealers and manufacturers? When a Toyota dealer runs an illegal or unethical ad, it’s my duty to point this out to him and the public, just like I would a Honda or Ford dealer.

As you might surmise, I get a lot of heat from many car dealers. Incredibly, many accuse of me of being the reason they have such a bad image. The latest Gallup Annual poll again ranked car dealers last in ethics and integrity among all professions. Car dealerships also receive the greatest number of complaints among all retail businesses. Car dealers want to shoot me, the messenger, rather than look in the mirror.

Whereas you shouldn’t be surprised that other car dealers don’t like my role as consumer advocate, you might be surprised to know that Toyota doesn’t like it either. Toyota created a contractual document several years ago entitled the Toyota Dealer Ad Covenant, TDAC. The primary motivation for this document which all Toyota dealers must sign and agree to was to keep dealer advertising on the “up and up”. But there’s also language in the TDAC which prevents one Toyota dealer from being critical of another. It makes no difference whether the criticism is true and factual or not. The rationale behind this rule is that Toyota does not want its dealers to “damage Toyota’s brand”.

This is what I have a problem understanding. The Toyota brand is based on the quality of the cars they build and the positive perception of the Toyota manufacturer as a company that shows care, concern, empathy and integrity toward their own employees and their car owners. The Toyota brand ranking has always been very high. It slumped slightly after the sudden acceleration recall, but has currently risen back to #1 among all auto manufacturers.

The public sees the Toyota brand as separate and apart from the dealer brand. The brand of “John Smith Toyota”, the dealer, is based on how he treats his customers, how he advertises, and how ethically and honestly he sells and services Toyotas. Unfortunately, Toyota dealers’ brand image has been ranked consistently below average by JD Powers’ surveys of all other makes for many years, while Toyota, the manufacturer’s brand has always been very high. When a Toyota dealer damages his dealership brand, Toyota buyers give their business to the dealers with the better reputation. This is the way the free market place is supposed to operate and is what competition is all about. By “keeping quiet” about problems that Toyota dealers have, one prolongs the process of correction. In their advertising, all competing retailers compare their strong points to their completion. It’s survival of the fittest in the marketplace. There is very little, if any, correlation between Toyota’s brand and Toyota dealers’ brand; If there were, how could Toyota’s brand remain the highest and Toyota dealers’ brand remain near the lowest for so many years?

Toyota dealers compete against each other to a greater extent than they compete against other makes. Car buyers usually make up their mind which make they want to buy before they select their dealer. Their next step is to choose the dealer that they can most trust to give them a good price and treat them with courtesy, respect and integrity. For all Toyota dealers to be contractually forbidden to speak even the truth in criticism of another Toyota dealer seems almost like a restraint of trade. The car consumer should be entitled to all of the facts about the advertising and sales practices of those retailers that they buy from. Toyota dealers know more about this subject than anybody else. A Toyota dealer can tell you that the Honda dealer is using bait and switch advertising but he can’t say that about his Toyota competitor. But, with that said, I signed the TDAC and I will honor my commitment.

Unfortunately, there’s been some conversation recently about gagging the “other Earl Stewart”, Earl Stewart, the consumer advocate. It’s been suggested to me that I may be in violation of the Toyota Dealer Ad Covenant if I post a YouTube video of another Toyota dealer’s unethical TV ad on www.YouTube.com/EarlOnCars, a website that Earl Stewart the consumer advocate uses to expose illegal and unethical advertising by car dealers of all makes, including Toyota. Toyota is the largest seller of new cars in this market and for me to exclude them from criticism would come across as wrong and self-serving.

I didn’t forfeit my first amendment rights when I became a Toyota dealer. I remain a U.S. citizen and retain my rights of freedom speech as an individual and as a member of the press (my book, radio show, blog, and Hometown News column). I have to draw a line in the sand if anyone tries to take away my constitutional rights.

Dealers First in Most Consumer Complaints

Car Dealers Strike Again!

 It pained me, but did not surprise me, to read that automobile-related complaints once again topped the list of consumer concerns (Automobile-related complaints top the complaints list once again – Aug. 12, Susan Salisbury).  Sadly, automotive sales people are also ranked among the lowest as shown in this latest annual Gallup poll…

So, as a car dealer who has literally written the book about how to avoid getting ripped off when buying or servicing you car, I would like my readers of the top 10 things NOT to do:

 (1) Don’t believe automotive ads. Often the extremely low price or discounts apply to only one car or to a very select group that you won’t fit in.  It is best to just ignore these ads.

(2) Never buy a car on impulse on the first day you start shopping. There is something about a new car that excites people and appeals to them on an emotional level. Go home and think about it this major purchase.. Research the model of car you looked at and the price on the Internet. You should take at least a week or two in the decision making process before you buy a car.

(3) Don’t trade your old car in to the dealer you buy from without shopping its value.. The dealer can make it appear that he is giving you a lot of money for your trade by taking some of the high markup on the new car and showing it as part of the appraisal value. Check Kelly Blue Book (kbb.com) and Edumnds.com on the Internet. Get at least 3 bids from other dealers of the same make for your trade. Make the purchase of the new car and the sale of your trade two separate transactions.

(4) Don’t use the dealer’s financing without checking with your bank or credit union. Shop for the best price on your financing just like you shop for the best price on your trade-in and the best price on new your car.  Oftentimes credit unions, which you don’t have to be a member of, have the best rates.

(5) Don’t believe it when they say “This low price is good today only”. This is one of the favorite ruses used by car sales people and dealers. In 99% of the cases, you can buy that car for the same or an even lower price later. The only time that you can’t is when factory incentives expire on a certain date, typically at the end of the month. If that is the claim, demand to see the written factory incentive by the manufacturer.

(6) Don’t agree to “Make me a written offer with a deposit and I will submit it to my manager”. This is to get you psychologically engaged in the buying process. Once you have signed a buyer’s order and written out a check, you will remain in the dealership for a while and are more likely to buy. The salesman knows that. Insist on getting their best price on the car you have selected. You should never make the first offer. Once you have their price, compare it with at least 3 other prices from other dealers on the same make and model.

(7) Never agree to "take this new car home and see how you like it?". This is the famous “puppy dog” technique so named because once you take a puppy dog home overnight, who has the heart to return it the next day? You, your neighbors, and friends will see that shiny new car parked in your driveway. It sure looks good! How can you explain to anybody that you didn’t buy it?

(8) Don’t commit to “buy the car if you can get my monthly payments below $___.__” Most of us tend to think in terms of our monthly budgets. We might feel that we can afford a new car as long as it costs us less than $350 per month, but there is a big difference between $350 per month for 36 months and $350 per month for 72 months. I recommend that you finance a car for no more than 42 months, preferably 36.

(9) Don’t believe “You have my word on that.” Be absolutely sure that every promise or commitment made to you by your sales person is in writing and signed by a manager. No exceptions!

(10) Don’t accept that “All dealers charge a dealer fee and we can’t remove it from the invoice.” In fact, all dealers do not charge a dealer fee. I don’t. But unfortunately most do charge this “gotcha” ranging from $495 to $1,000. It is true that Florida law (which should prohibit dealer fees entirely) requires that the dealer fee appear on all invoices. If you charge just one customer a dealer fee, you must charge everybody. The state legislators, in their infinite wisdom, decided if a car dealer is going to take advantage of even one buyer, he must take advantage of all of the buyers….never discriminate. But the loophole in this stupid law is for you to demand that the dealer reduce the price of the car by the amount of the dealer fee, making it a wash.

All of this information and much more is contained in my book, “Confessions of a Recovering Car Dealer.”  I donate 100% of the sales of the book to charity as I make my living selling cars, not books.  Many local groups have used this as a fundraiser, by having me speak at their meeting and receiving all of the proceeds from the books purchased that day by their members and guests. You can purchase my book on www.Amazon.com.

I know I will never win a popularity contest among other car dealers, but I am ashamed of the ethics of our industry and am dedicated to doing everything I can to change it.

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 eight 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.