Open Letter to Elon Musk: Eliminate Hidden Fees on Teslas

Dear Elon,

I’m a new customer of yours and Tesla, having recently purchased a new 2021 “Model S Plaid”, and I’m anxiously looking forward to taking delivery this next month. I’m also a long-time fan and follower of your incredible technological and business accomplishments. You’ve never heard of me, but I’m a car dealer and a consumer advocate. You can Google me or check me out at www.EarlOnCars.com, www.YouTube.com/EarlStewart or read my book, Confessions of a Recovering Car Dealer, available on Amazon (100% of all proceeds are donated towww.BigDogRanchRescue.org). I’d love to have you call my live radio talk show, Earl on Cars, some Saturday morning between 8 and 9 am EST. You can stream it live atwww.StreamEarlOnCars.com. Or, please call or text me personally at 561 358-1474.

Regarding the headline of this article, please believe that I don’t believe that you are aware that your Teslas are beingadvertised and sold without clear and conspicuous disclosure of additional profits to Tesla. In the displayed attachment to this article of my Model S Plaid invoice, there are two items added to the advertised and quoted price of the Model S Plaid…$1,200 for “Destination and Documentation Fees” and a $100 “order fee”. As, I’m sure you’ll agree, these costs your recovering by adding it to the price, (after the ad price) should be included in the price your communicating to your buyers.



As a “recovering automobile dealer”, I’ve greatly admired how you’ve reinvented the auto retail business by making the buying experience of a Tesla an honest and transparent one…” almost”. Tesla doesn’t resort to bait and switch advertising or any other forms of high-pressure haggling and deceptive selling practices. Competing car dealers consider Tesla a threat to the current dealer franchise system which prohibits any entity other than a franchised car dealer sell a new vehicle in the USA. All other auto manufacturers are required by “ancient” state auto-franchise laws to sell only through their franchised dealers. This allows car dealers to get away with blatant unfair and deceptive sales practices.

Hopefully this letter and the revelation of Tesla’s $1,300 in hidden fees will come to your attention. If it does, I know that you will, not only eliminate this $1,300 in added profit to Tesla, but retroactively refund the hidden fees charged to Tesla customers in the past. My suggestion to you is that you simply raise the price of all Teslas by $1,300. This certainly wouldn’t have made a difference in my purchasing my new Model S Plaid, nor do I believe it will deter most Tesla buyers. Your buyers are like me and are drawn to buy a Tesla because it’s arguably the best, most exciting automobile ever built. You have no competition at the present time, but when the competition gets serious, you should preserve Tesla’s reputation of being, not only the best car made, but the only one sold with total honesty and transparency

- Earl

Used Car Prices Soar to All-Time High Wholesale Prices Up 54.3%

 

One of the biggest unexpected and unintended consequences from the Covid pandemic and the resulting economic impact are record used car prices. It’s very important for you to know and understand this if you’re thinking of selling your car, trading it in, or if you’re currently driving a leased car.

Selling your car today will be the first time you’ve ever been able to sell a car today for more than it was worth over a year ago. Yes, your car didn’t depreciate last year, it appreciated. When selling or trading your current car, I usually recommend getting bids from 3 difference buyers. With these extraordinary, soaring and volatile used car prices, my recommendation is to get as many bids as you can…at least 5 or 6. I’ve been a car dealer for over 50 years, and even I’m being surprised by these prices, especially the volatility. Your best bets on getting the highest price for your used car are from CarMax.com, Carvana.com, Varoom.com, WeBuyAnyCar.com, or the used car lots for any dealer of the make of used car you own.

Trading in your car, it’s imperative that you don’t trade it to the dealer you’re buying your next car from, until you’ve gotten at least 5 or 6 bids from the sources I recommended in the last paragraph. Don’t accept book values like Kelly Blue Book to justify the trade-in allowance as being fair. Book values are often wrong, especially in today’s volatile and rapidly changing market. You should give the dealer from whom you’re buying your next car the “last look” at buying your

trade-in to enjoy the sales tax exemption of the trade in allowance. Florida sales tax is 6%, so you’d save $1,200 on a $20,000 trade-in by trading it to the dealer you’re buying your next car from. Most states have similar exemptions.

If you’re leasing a car, you have the rare opportunity to make money by exercising your right to purchase your lease car at the end of the lease. In the past, most of the time, the residual value (your purchase option price), is higher than the current wholesale value. Today, you can often exercise your lease purchase option at a price below the current wholesale. This means you can buy your car at a great price and continue to drive it or buy it to “flip” …sell it back to a dealer at more than you paid. As always, there are obstacles which you must deal with when car dealers are involved. The leasing dealer will probably charge you extra fees, his dealer fees which are hidden fees he adds to cars he normally sells. Also, the leasing company can charge you a “lease disposition fee” which is waived if you buy or lease another car from their dealer. You can return your lease car to any dealer of the make of car you lease, and you should seek out one that will charge you the lowest dealer fees.

When shopping your car withthe sources I’ve suggested, remember that the more bids you get, the more likely you’ll find a very high price. Companies like CarMax and Carvana will sometimes pay more than anybody else, even the “bible”, Manheim Auto Auction price. Why would they do this? Because the used car market, wholesale and retail, is so volatile that, at any given time there are lots of anomalies. CarMax or Carvana may see a sudden spike in the retail price in certain models that the Manheim auction hasn’t adjusted for

Buy this New Car for Only $99 per Month

www.AintGonnaHappen.com

Chances are, since you’re reading this, you’re not very likely to visit a new car dealership, believing you can buy any new (or used) car for only $99 per month. Sadly, lots and lots of people aren’t as savvy as you and do believe it.

Since I’m largely “preaching to the choir” because most readers of my blog and column are educated consumers, why do I write about this? It’s because most of the large volume dealers do resort to this, almost obscene, form of bait and switch advertising. They wouldn’t be spending hundreds of thousands of dollars on TV, digital, radio, and billboards telling their readers and listeners they can buy this car for $99/mo. if it didn’t work.

The targets of this unethical, immoral, deceptive, and illegal advertising are the “victims” of our society. They’re the elderly, very young (buying their first car), the English language impaired, uneducated, and, yes, the just plain gullible. Some areas of our county have large populations of first- and second-generation immigrants; other parts have large elderly populations. South Florida has both. I get lots of emails and phone calls from elderly widows, baby-boomers and pre-boomers. Wives usually survive their husbands and they lived most of their lives during a time when the husband bought the cars in the family. I hear from many widows that are having to buy a car for the first time in their lives. Sadly, they’re easy marks for car dealers’ bait-and-switch ads.

So, my purpose in writing this article is not to inform you but asking you to help me inform others. Let it be knowns to your friends, family and neighbors that you’re available to advise them on buying their next car; or suggest that they read my blog, www.EarlOnCars.com, listen to my radio show Saturday mornings at www.StreamEarlOnCars.com, buy my book, Confessions of a Recovering Car Dealer on Amazon (100% of proceeds go to Big Dog Ranch Rescue,www.BDRR.org). Or read this column in Florida Weekly or Hometown News.

Or, click on SIGN UP NOW! on my blog page and join “Earl’s Vigilantes”. If I accept you as a qualified advisor on “how not to get ripped off by a car dealer”, I’ll send you a “cool hat”, free, with the Vigilante logo, and list your contact information on my blog so that people in your geographic area can contact you for help. Online skills are important for our vigilantes to have, because buying a car online today, is the very smartest way. Virtually all “victims” of $99/mo. ads visit the car dealerships where it’s easy for them to be tricked.

Thanks very much for considering applying as one of Earl’s Vigilantes. When you’re approved, I look forward to working with you to save as many victims of car dealers’ bait-and-switch advertising as possible.

Dealer Fees are Hidden Fees and Deliberately Deceiving

Shame on Florida’s regulators and legislators for aiding and abetting Unfair and Deceptive Trade Practices by 99.9% of all Florida car dealers. Almost every auto dealer in Florida adds hidden, extra charges to their advertised and quoted prices for autos and even service. The Attorney Generals have all “looked the other way” on this for many years. Our lawmakers in Tallahassee have done the same. Why? Without car dealers, their associations and Political Action Committee contributions, nobody can get elected to office in Florida or any other state.

Florida does have a law, ostensibly controlling “dealer fees”, but it may as well be not have such a law. It’s not enforced and, even if it was, it’s written with so many loopholes that smart dealers can technically comply and still deceive their customers. Because the law is never enforced, dealers generally ignore it. The law has been ignored for so long that, it may as well not exist. It’s very similar to the speed limit laws on most highways, especially I-95, Florida turnpike, and the Sawgrass Expressway. Every driver on these highways knows they can exceed the speed limit by 9 or 10 miles and mph with no chance of being stopped even faster with very little chance. Now, because every driver is speeding and practically no speeding tickets are issued, it’s actually dangerous not to speed.

The analogy to hidden fees by dealers is solid. It’s dangerous for a car dealer to not charge a dealer fee because all the competing dealers in his market do add hidden fees to their advertised and quoted prices. If he advertises a new Honda Accord for $1,000 more than his Honda dealer competitors, he has very little chance of selling the car. Honest, ethical car dealers are forced to “fight fire with fire”. I’ve had many car-dealer friends and associates over the year tell me, “Earl, I don’t like having to charge hidden fees, but, if I didn’t, I’d “go broke”! Car dealers profit margins as percent of sales is very slim, between 1% and 3%.

The average new car today sells for about $40,000. A 3% profit is only $1,200 and that’s the gross profit before expenses…commissions, advertising, and lots of other overheard expenses like rent, utilities, and insurance. The net profit on a new car is only $200 or $300. Because a dealer’s competitors are all advertising and quoting prices a $1000 or more below their cost, how can an honest dealer with no hidden fees to secretly raise the price survive?

The average hidden fees in South Florida are over $1,000. All dealers have several fees by different, official-sounding names, adding up to as much as $3,000. Some of the popular deceptive names are electronic filing fee, tag agency fee, doc fee, e-filing fee. Some dealers even double charge for the factory freight which is included in the price of all new cars.

Other dealers charge for “dealer prep”, purportedly to prepare the new car for delivery when they are generously reimbursed for this by their manufacturer. Incredibly, the Florida addressing dealer fees requires dealers to lie to their customers by “disclosing” their dealer fees by this verbiage…” This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles,.”. Florida statute 501.976 (18) requires the dealer to tell you that they are charging you for performing the same work on your new car that they’ve ALREADY BEEN PAID FOR by their manufacturer.

This is not a re-run column. I’ve written many columns railing against the hidden dealer fees that are an out-of-control pandemic, especially in Florida. I won’t give up because I know that truth and justice will ultimately prevail. I know that consumers and voters are growing smarter at warp speed during this digital 21st Century. Consumers and voters will reach a breaking point, where they’ll no longer tolerate regulators and legislators who allow this unfair and deceptive affront to car buyers to exist any longer.

VOLUNTEERS WANTED: Online Assistance for Senior Car Buyers

I’m proud that my car dealership was featured last week on the NBC Today Show (View the video at www.EarlStewartCovidRescueTeam.com). Thus far, we’ve made Covid vaccination online appointment for over 200 senior citizens, unable to navigate the process themselves.

This inspired me to form a similar team of online-savvy, educated car-buyers to assist our very large elderly population in buying their next car online. If you’re a regular reader of this column, newspaper columns, or a listener to my radio show, you know that the safest way to buy a car today at a low price today is online. A high percentage of our elderly population can’t operate, or are uncomfortable with, computers and smartphones.

If you’re computer-savvy” and have the time and car-buying skills, please let me know. Click on www.EarlOnCars.com and the link on the right, Volunteers for Senior Online Car Buying Assistance. I’ll ask for a summary of your qualifications and your contact information. I’m looking for volunteers from all over the USA who listen to my radio show, read this blog and newspaper column, and follow me on Facebook and YouTube. Thank you for your consideration.

Three Rules to Follow When Financing Your Car

Car dealers make much more money financing your car than they do selling or leasing it to you. Most buyers concentrate on the price they pay or the monthly lease payment, but you should focus and concentrate even more if you’re thinking about letting the dealer “arrange” your financing. Most people do this and they shouldn’t.

 

• First, the good news about dealer financing. If you’re buying a new vehicle, most manufacturers offer very low interest rates to induce you to buy…often as low as 0%. If you’re buying a new vehicle, you should always find out if the model you’re buying has special low financing offered by the manufacturer. You also need to know if you’re credit score will qualify you for this low rate. If so, remember that there’s usually a special discount offered as an ALTERNATIVE to the low interest rate. You can’t have both the discount and the low interest rate. The dealer’s advertising doesn’t make this clear because he wants you to believe you can have both. You need to do the arithmetic, taking into consideration the amount you’ll be financing, the number of months you finance, and how the difference between the low rate and your bank or credit union’s rate. Remember, the 0% may be offered for 60 months, but you’re going to trade the car in after 48 months.

• If the manufacturer doesn’t offer a very low interest rate on the model you’re buying, that you can use, always get a rate from your bank and credit union. If you’re not a member of a credit union, consider joining one. Just because the company you work for doesn’t have a credit union, there are credit unions you can join without the affiliation of your company. If you don’t have a banking relationship with a specific bank, contact one and ask. Be sure that you understand that the dealer is getting the money he wants to loan you from a bank (often owned by his manufacturer). The dealer then MARKS UP the interest rate the bank charges him and applies that to your car loan. The dealer “pockets” the mark-up. The amount of the mark-up varies, but 2% is common. If you’re financing $30,000 for 60 months, the dealer’s mark-up is about $1,700. Some dealers retain all of that, but most keep about 75% or $1,275. The dealer will usually make another $1,000 in warranties, maintenance and “products” like GAP insurance. The dealer averages less than $1,000 on the sale of a new car. He’s making twice as much financing the as he did selling it 

• If you were raised like me, your parents told you never to borrow more money than you absolutely must. When you do borrow, you should always make as large a down payment as you can afford. This doesn’t always hold true today because interest rates are at historical lows and sometimes manufacturers offer even lower rates. If you have excellent credit, your down payment should be as low as the bank will accept…hopefully zero. Today, you can conservatively invest your money to earn a higher return than you must pay to finance your car. But, if you’re going to finance with the dealer and intend to make a large down payment, NEVER TELL THAT TO THE DEALER before he gives you his final out-the-door price. Why? Because the banks dealers finance your car through limit the amount they will finance based on your credit and, the more you put down, the higher the dealer can increase his profit margin. Dealers will often push you for a larger down payment because they can’t finance as much profit as they’d like. They’re likely to tell you that the bank requires a larger down payment which is true, but they don’t tell you it’s because they’re making a huge profit on the car.

Seven Dirty Little Auto Leasing SecretCar Dealers Don’t Want You to Know

You may have noticed that almost all new car advertising today focuses on leasing. A few years ago, leasing a car was rare…less than 10% of total sales, and usually done by businesses. Businesses lease often because of tax deduction and balance sheet considerations. Business leases virtually never required a down payment. Following are the reasons that retail auto leasing to individuals has surged to more than one-third of all car sales. Some dealers are leasing over half of all their sales.

I’m not suggesting that a lease can never be as good a value as a purchase or even better. To the informed, sophisticated lessor, leases can be the way to go. Manufacturers do sometimes offer special lease rates and residual values which can make a lease cheaper than a purchase. But fewer lessors/buyers can navigate the following “complications and deceptions” of leasing.

• Car dealers make more than TWICE as much when they lease you a vehicle rather than selling it. This is largely because they can attract you on a falsely low monthly payment, and your focus isn’t on the actual total cost of leasing.
• Every advertised lease you see has a large down payment hidden in the fine print.
• Customers are coerced and enticed to lease or buy another car from their dealer after their first lease. This is because the dealer never loses contact with you. You must return the lease car to him and he remains in close contact with you every time you make a lease payment. If you don’t buy or lease another vehicle from the dealer/manufacturer, you’re penalized with a “lease disposition fee” of several hundred dollars.
• There are many more hidden fees in a lease contract than a purchase contract. There’s an “acquisition fee” for several hundred dollars, lease disposition fee at the end of the lease, charge for above “normal” wear and tear when you turn in your lease car, and a mileage charge for exceeding a certain number of miles per year. Of course, the dealer still charges the same hidden dealer fees he charges you when you buy the car. Most of these charges should be included in the monthly lease payments up front, but they aren’t.
• Despite popular belief, you must make all the lease payments you signed the contract for. It doesn’t matter if you decide you don’t like the car or if it breaks down a lot and/or runs terribly. The leasing company (usually owned by the manufacturer) is separate legal entity. You still must make every lease payment even when the reason you can’t drive your lease car is the fault of the manufacturer or dealer. You also must make all the lease payments even if you’re disabled and can’t drive or die (your estate is liable for all remaining lease payments). The leasing company will insist that you make your monthly car insurance payments even if you can’t drive the car and it’s sitting in your garage.
• Because your monthly lease payments build no equity as they do on a purchase, you will always have to make a large down payment when you buy or lease another vehicle. Basically, once you lease a car, you can be trapped into leasing again and again. Today’s new vehicles are so reliable and maintenance free that many buyers are keeping their cars for five years and more. Furthermore, they have no more monthly payments!
• The dealer that leased you the car and other competing car dealers will be calling you to lease or buy another car when they know you have only a few more payments left. They’ll also tell you not to worry about the remaining lease payments because they’ll make those to the leasing company for you. Yes, they will pay the leasing company the remaining payments that you owe, but WITH YOUR MONEY, because they add those payments onto the price of the next car they lease or sell you. Remember that the dealer, the leasing company, and the manufacturer are all separate legal entities. Each has their own selfish interests, and you’re not one of them.

Auto Dealers Think and Act Differently from their Manufacturers

A new car dealership is a franchise unlike any other. Most franchised businesses are rigidly controlled by the parent company like Marriott, McDonalds, Ace Hardware, Century 21, Midas Muffler, H&R Block, and Tire Kingdom. New car dealers are more independent and able to do business the way they want to than any other franchised business.

This is important for you to know and understand, because what a car dealer tells you and how he treats you isn’t always the way his manufacturer would have it. If you have problems with your dealer you should communicate your dissatisfaction to his manufacturer and consider trying another dealer of that same franchise. The manufacturer will communicate your dissatisfaction to the dealership owner and/or general manager, and will sometimes (off the record) direct you to a better dealership. The manufacturer has no power or control over the dealer to force him to do the right thing, but sometimes the mere communication to the dealership management can have a positive effect. Your best bet is to simply try a different dealer. He might be a better dealer, but, if even if he’s not, he’ll be competitively motivated to make you see him in a more favorable light.

Fortunately for you, there’re lots of car dealerships that sell the same make you want to buy. There are about 18,000 new car dealerships in the US. If you’re a Chevy buyer, there’s about 3,000 to choose from, and probably 3 or 4 nearby. Online, you have an almost unlimited number of dealer choices.

The lack of the ability of auto manufacturers to control their dealers is unique among all other franchised businesses. The control and protection of new car dealerships is in the hands of our 50 state governments. Each individual state government department of motor vehicles insulates new car dealers from any real control by auto manufacturers. This was accomplished in the first half of the twentieth century by powerful dealership lobbying groups to protect dealers against unfair and punitive bad behavior directed at car dealers by auto manufacturers. This legislative protection against manufacturers has had the unintended consequences to protect dealers from control against bad behavior by them against car-buyers.

You might be wondering why the states don’t do a better job of protecting car buyers against predatory car dealers. The answer lies in the same powerful lobbying that insulated dealers from their manufacturers. Car dealers, their PACS, and associations are numerous, very wealthy, and very politically powerful.

You can file a complaint with the state Attorney General and/or Department of Motor Vehicles, but that’s time consuming and it’s often after-the-fact. Your best bet is, after you’ve chosen the right car, invest some time in choosing the right dealer.

You Don’t Know What You Paid for Your Car

You might think you do, but you’re probably wrong. You think you paid the advertised price, or the one quoted you by your salesperson, but you paid a lot more. No, I’m not talking about added sales tax and the license plate which you expected to be added to the advertised price. I’m talking about hidden, additional profit to the dealer disguised as government fees and added accessories that you didn’t ask for or even know about. If you bought your car in Florida, you probably paid between $1,000 and $2,000 in added profit to the dealer. You paid less in other states that have some restrictions and limits on hidden fees. Florida has virtually no restrictions and the few they have aren’t enforced.

If you doubt me, look at the signed documents you should have been given when you purchased your car…specifically the Vehicle Buyer’s Order, Installment Sales Contract, or Lease Contract. Near the top will be the supposed “Selling Price” and below that there’ll be several additions. Two are legitimate government fees which are not profit to the dealer, because he must pass these along to the state government. These are sales tax and license/registration. But some of the “fees” are disguised profit to the dealership. Florida has a law that that this added profit must be disclosed to the buyer as such, but this disclosure is disguised and hidden in the fine print. If you look closely, you’ll see “fees” named tag agency fee, doc fee, notary fee, electronic filing fee, dealer prep fee, administrative fee, service fee, and delivery fee. Florida law allows dealers to make up any name they wish and that’s just what they do. The surefire test if a “fee” is really dealer profit, is whether you were charged state sales tax on it. The state does not collect sales tax on a real government fee, just on the true price of the car including the dealer’s profit.

The other bogus price increase, in addition to hidden fees, are dealer-installed accessories. These consist of overpriced, virtually worthless items pre-installed on the car you bought, but not included in the advertised or quoted price. Some examples are nitrogen in tires, roadside assistance, pinstripes, road hazard insurance, fabric protection, and paint sealant. You didn’t ask for these, but you bought them anyway because they were added to your car before you bought it.

I’d love to hear from anybody reading this if they actually paid the advertised or quoted price. Call or text me at 561 358-1474. I’m not concerned about my “phone ringing off the hook” because I know almost everybody was tricked by their car dealer.

Answers to Top Ten Devious Statements Made by Car Salesmen

Salesperson Says: “I’ll give you the price only if you’ll commit to buy today.” 

Your answer: I’ll ask you once more for your best price. There are 3 car dealerships that sell this same make within a half-hour drive of here. If I don’t get your best price right now, I’ll walk out of your showroom and you’ll never see me again. 

Salesperson Says: “I’m sorry, but we just sold that car we advertised, but we have others just like it”. 

Your answer: I know that Florida law now allows you to add your $999 dealer fee to the advertised price, because, technically, I’m not buying the advertised car. I also know that you can now legally add “dealer installed options” to the low ad price. However, if you do not sell me the car I came in to buy for the advertised price, I will walk out that door and you will never see me again. 

Salesperson Says: “This price is good for today only”.

Your answer: I don’t believe you and I won’t make my decision to buy today. I want to shop and compare your price with your competition and, if yours is the best price, I will call you to see if I can buy it for that price. If you tell me that I can’t, I’ll buy it from your competitor. 

Salesperson Says: “This price is so low that I’m willing to guarantee it or pay you $1,000 [or some other amount] if you can find a better one”. 

Your answer: First of all, no retailer can always have the lowest prices. If they did, they could not make a profit and remain in business. I’ll bet you can’t give me the name of just one customer that you paid your $1,000 guarantee to. I also know that you ‘reserve the right to buy the exact car from the dealer that I say has the lower price.’ What makes you think that I would believe your competitor would sell you that car so that you could steal his customer?” You must think I’m really stupid and I don’t want to buy a car from somebody who thinks his customers are stupid. 

Salesperson Says: “I can give you this price only if you take a car from my present inventory. If I have to order a car or dealer-trade a car, the price will be higher.” 

Your answer: My car is very important to me. I want the exact color and accessories that will satisfy me and not a compromise. I will buy the car from you only if you agree to get me the exact car I want at the price you just quoted me. If not, I’ll bet that your competitor will. 

Salesperson Says: “I can’t give you this price in writing unless you will give me a deposit”. 

Your answer: I know that Florida law allows you to keep my deposit if I change my mind about buying. I also know that you do not want to commit to a price in writing because I might show your price to your competitor who may beat it. That’s the risk you have to take if you want my business. If you do, you have a chance at my buying a car from you. If you don’t, you have no chance because you will never see me again. 

Salesperson Says:“What will you pay for this car today? Or, make me an offer on this car and I’ll take it to my manager for approval”. 

Your answer: This is not a game that we’re playing. I’m about to make the 2nd largest purchase of my life. If I was shopping for a TV set and the salesman said that to me, I would walk out without another word and buy from his competitor. And that’s exactly what I’m about to do to you unless you give me your best price in writing. 

Salesperson Says: “We cannot quote you a price over the phone”. 

Your answer: It makes no sense to me that I should have to drive 10 miles and back to your dealership just so that you can tell me the price of the car I want to buy. I can get prices on the Internet so why can’t I get them on the telephone? I think the reason you want me to drive to your dealership is so that you can pressure me into buying today without competitive shopping. If you won’t give me your best price right this minute, you will never hear from me again because I will buy from your competitor. 

Salesperson Says: “I’m sorry but the owner isn’t available right now and we are not allowed to give out his cell phone number”. 

Your answer: If the owner of this dealership is too busy to speak to his customers than I’m too busy to buy my next car from him. 

Salesperson Says: “The reason that this $999 item labeled dealer fee [or doc fee, dealer prep, handling fee, admin fee, pre-delivery fee, etc] was not included in the price that I quoted you is because it is ‘to cover our costs of inspecting, cleaning, and adjusting vehicles and preparing documents for sale’.” 

Your answer: The price quoted to a customer for any product should include all of the costs of the seller. Furthermore, I know that the manufacturers of all cars reimburse their dealers for “inspecting, cleaning, and adjusting vehicles”. I also know that now you’re going to tell me that you must charge me your dealer fee because you charge all customers this same fee. But, I also know that you can deduct the amount of your fee from the price you quoted me and leave the dealer fee on the buyers’ order which will have the same net effect of removing it. If you do not agree, I will walk out of your dealership and never return.

Choosing and Buying Cars in the Digital Age

I turned 80 last month and I have many friends and associates that are around my age. We grew up, were educated, and worked from the 1940’s through the 1990’s. We lived in a world where we wrote letters, listened to radios, watched black and white TV, called friends on old fashioned telephones, and if we had a computer, it had a dial up modem. The Internet didn’t exist until 1983 and Google was born in 1998. We Baby Boomers entered the 21st century without a clue about the DIGITAL EXPLOSION that would transform the World. Some of us were able to adapt, but most of us haven’t.

2021 is the perfect example of “The Best of Times and the Worst of Times”. This applies to almost everything, but I’m a consumer advocate and a car dealer (no, that’s not an oxymoron). My goal is to help you digitally buy or lease your next vehicle without being ripped off by a car dealer. Following are some tips on buying or leasing a new or used vehicle utilizing all the support you can find online.

• Find a friend that’s digitally savvy. Your children and grandchildren will probably qualify.
• Your digitally qualified assistant will enable you to communicate with online sources to choose the best year-make-model vehicle for you. They will also help you find the lowest out-the-door price. Definition: The price you can write out a check for, give it to the dealer, and have him deliver your new car to your front door.
• Be prepared to buy your next vehicle entirely online. You should not visit a car dealership except to test drive the vehicles you’re considering. In fact, many progressive car dealers offer to bring vehicles to you for test driving and evaluation. Most car dealers are reluctant to sell you a car completely online becauseyou have control and they don’t; however, if you insist, they have no alternative but to comply.
• The best sources of online information for your digitally savvy assistant are www.ConsumerReports.com,www.CostcoAuto.com, www.TrueCar.com,www.AutoTrader.com, www.Edmunts.com, www.Kbb.com, and, last but not least, www.EarlOnCars.com.
• Your total control over the dealer online is because he understands that his one and only chance to sell you a car is to give you his best out-the-door price online. Be sure to tell your cyber-savvy assistant to keep you anonymous by not revealing your real phone number or email address. She can create a functional email address just for this purpose and use a fictious phone number if necessary. This way, you can contact as many dealers as you like without fear of being hounded salesmen.
• Arrange your financing online using your credit union or bank. Today, everything can be done digitally including exchange of documents and signatures. In some cases, the new car dealers’ manufacturers offer lower financing rates than your bank or credit union, as low as zero percent. Confirm that this is offered by the manufacturer, not the dealer and conduct that transaction online also.
• Establish the value of your trade-in online also.www.Carvana.com, www.WeBuyAnyCar.com, andwww.CarMax.com are three good sources for getting bids on your current used car. You can also shop your car with the dealers of your same make used car departments. A Honda dealer used car manager will usually pay more for a used Honda than a Chevrolet dealer.

I hope this works for you and I wish you the best of luck. If you can’t find a “cyber-savvy” digital assistant, I’m always available for advice. I’m one of the few baby boomers who’s cyber-savvy, thanks largely to a scientific education and a lifetime fascination with science.

Let Me Help You Buy Your Next New Car Online

I promise you that you’ll get a lower price on your next new car if you buy it online. Many people, especially those born and raised before the “digital revolution” may feel nervous or are incapable of this technological challenge. If you do, I’ll personally walk you through the process. Because I have no idea how many people will take me up on this offer, I must limit it to the first 100 to ask. 

• Call, email, or text me with the Year, Make, Model, and MSRP (manufacturer’s suggested retail price).

• Please furnish me with your zip code and, if there’s a new car dealership that you’d prefer to buy from.

• I’ll need your name, email address, and phone number. I promise to keep this information private. I’ll be using a fictious name, email address, and phone number when contacting dealers on your behalf. This will avoid you receiving a deluge of car salesmen hounding you. 

• If you’re a Costco member, please furnish me with your Costco membership number. The Costco auto buying program is your best source of getting the lowest price. If you’re not a member of Costco, I recommend you buy an annual membership for $60 just for their auto buying program.

In less than three days, I’ll advise you of the lowest out-the-door price of the car you told me you wanted to buy. This out-the-door price is the amount you can write a check for, hand it to the salesman, and drive your new car home.

If you don’t know me, you’re probably asking yourself “Why would he go to the time and trouble to do this?” The answer is that I like to help people like you. If you’ll read my blog, www.EarlOnCars.com you’ll understand.

You might also be saying to yourself, “This guy’s a car dealer and he’s just trying to trick me into buying a new Toyota from him!” You’d be right that I’m a Toyota dealer, but you’re wrong that I’ll try to sell you a car. Read my blog, buy my book (Confessions of a Recovering Car Dealer, available on Amazon… 100% of the proceeds go to the charity, Big Dog Ranch Rescue) or ask anybody that knows me, and you’ll learn the truth.

Finally, you might wonder if the price I find for you is truly the LOWEST. The answer is “not necessarily”. But it’s lower (likely much lower) than the price you would have paid had you not let me obtain the price online. You might be able to obtain an even lower price if you want to invest the time and aggravation in shopping my out-the-door price with even more car dealers. Just remember the definition of my out-the-door price…the price you can write your check out for and drive your car home.

Lowest Price on a New Car at End of the Month: Old Wives’ Tale, Urban Legend, or Fact?

This question is on the top ten list of most common questions I’m asked. The answer is “Yes”, you usually can save money when you buy new car at the end of the month. You also can save money on used cars, but not nearly as much.

The caveat is not to wait until the end of the month to begin your search and do your research. Be sure you’ve done your due diligence in choosing the right car for you and gotten competitive out-the-door bids from at least 3 dealers. You should have checked TrueCar and Costco pricing as discussed in my previous two blogs. If your reading this in my newspaper column, you can access all of my blogs at www.EarlOnCars.com.

Once you’ve gotten your best price on the specific car you intend to buy, you should “sit tight” until the end of the month. You will be “deluged” with warnings by car salesmen that this price won’t be good unless you buy the car now; or, this car will be sold if you don’t buy it right now. Ignore these threats. Toward the end of the month recontact the dealer that gave you his best out-the-door price. In case you don’t know the definition of an out-the-door price, it’s THE PRICE YOU WRITE YOUR CHECK OUT FOR, HAND IT TO THE SALESMAN, GET IN YOUR NEW CAR AND DRIVE IT HOME. Don’t accept anything less just because they say it’s an out-the-door price.

Here are all the reasons you can get a much better price at the end of the month. (1) All car salesmen are paid on a monthly commission based the number of cars they sell in each month, and there are usually bonuses at the end of the month. (2) Sales managers are paid the same way. (3) The auto manufacturer pays the dealership end of the month bonuses. (4) Both manufacturers and dealers pour on their advertising at the end of the month which increases the competition between dealers. (5) Car dealers and auto manufacturers are “insanely competitive (I know because I’m insanely competitive…just ask anybody who really knows me.) Competition is your best friend when you’re buying a car. The end of the month is a perfect storm of competition between auto manufacturers and between car dealers. (6) Auto manufacturers and car dealers generate their financial, profit and loss statements monthly. They place huge emphasis on making their net profit forecasts. The typical car dealership will sell more new cars in the last 10 days of the month than he did in the first 20. (7) I’m writing this article on December 14 and you’ll be reading before the end of the year. THE END OF THE YEAR IS LIKE THE END OF THE MONTH “ON STEROIDS”. It’s the perfect time to buy your next new car.

A final word of caution on not venturing into a car dealership at the end of any month without having done your due diligence. The same factors that I just described can work against you, if you’re not fully prepared. Because car dealers want to sell you a car so bad at the end of the month, they’re likely topromise you anything they must, to make it happen.

TrueCar: Almost as Good as Costco to Buy Your Next New Car

In my previous column, I recommended CostcoAuto.com as the “Your Best Bet for a Low Price”. You can access that column at EarlOnCars.com. TrueCar.com is almost as good as Costco. When you use TrueCar carefully and diligently, you’ll get a fair, low price. When you use the Costco Auto Buying program, you’ll probably get a lower price, but not by much. This is because Costco contractually requires their certified dealers to give Costco members a lower price than they have sold the same car to anybody else.

So, why am I even mentioning TrueCar? It’s because (1) TrueCar’s program is easier to understand and use, (2) dealers’ hidden fees and extra dealer installed accessories are more clearly added to the bottom line price, (3) TrueCar offers many more certified dealers to choose from, (4) TrueCar gives your market price comparisons of what other buyers of the car you are buying paid, (5) TrueCar doesn’t require a $60 annual membership fee, and (6) perhaps most importantly, you can transact a TrueCar purchase entirely online. Costco requires you to go into the dealership.

I just mystery-shopped, online, TrueCar for a new 2020 Ford F-150 XLT with an MSRP of $46,525. I used a factitious name and email address. No phone number is required. I was able to get quotes from 42 Ford dealers, but I chose only to get final prices from two within a reasonable distance, Wayne Acres Ford in Greenacres, FL and Grieco Ford in Delray, FL. The lower of the two was Grieco Ford with an $8,299 discount from MSRP plus $1,459 in dealer fees and dealer installed accessories for bottom line price of $39,685. This price also included all factory incentives. All I’d have to pay in addition to drive my new F150 home were government fee…sales tax and license/registration.

I could probably have gotten a slightly lower price if I’d pursued this with some of the other 40 TrueCar certified Ford dealers available to me. However, TrueCar showed this price to be an excellent one based on actual transaction prices from their database. To be a TrueCar certified dealer, you must agree to allow TrueCar to access your computer database which reveals the actual transaction prices on all the vehicles you sell. In the last 30 days, my price was well below the average price…there were 4 sales of this F150 at a “high” price, 4 at a “fair” price, 8 at a “great” price, and 7 others at an “excellent’ price like mine.

It took me about 10 minutes to go through the above process. If I had been a real buyer, I could have gotten the lowest price from 42 Ford dealers, and it would have taken me an hour two. Compare this with driving from dealership to dealership, shopping dealer websites online, making phone calls, and there’s no comparison. As I said at the beginning of this article, don’t use your real name or email address and there’s absolutely no reason to give dealers your phone number. The harassment from car salesmen if you shopped 42 Ford dealerships and gave them your real contact information would be ENORMOUS. You can easily obtain a free email address from Google, Microsoft Outlook, Apple/iCloud, and AOL.

If you really want a super-low price and don’t mind spending a little more time,use Costco and TrueCar. Remember, that you’ll rarely see two car dealers quote you the same price on the same car. The more dealers you check and the more prices you compare, the lower the price you can get. Comparing at least threedealers is necessary, and you’ll realize a large savings from this. As you shop and compare more than three, the amount of the savings decreases incrementally. The Internet which spawned online car buying and third-party car buying companies like Costco Auto and TrueCar makes it possible to shop and compare as many dealerships as you want to. Furthermore, you’re doing all this from the comfort and privacy of your home.

Costco Auto Buying Program: Your Best Bet for a Low Price

This is not the first article that I’ve written on Costco’s auto buying program, but because I receive so many questions about it, I thought it useful to write another column on the subject.

Click on Costco Auto Program and navigate through their recommended process for buying a new or used car. You must be a Costco member, but this costs only $60 for the basic membership. I promise you that you’ll same many times this cost when you follow their instructions to buy from their dealers. Costco has new and used car programs, but I recommend you use only the new. Their used car program requires only that their dealers discount their list price to Costco members. The dealers with the highest asking prices for their used cars offer the discounts, but dealers with low prices can’t.

Carefully follow these recommendations for purchasing your car through the Costco Auto Program:

• When you put in your zip code, you’ll be shown the nearest authorized Costco dealer. You should find other authorized dealers in your market so that you can compare prices, especially on those that add extra non-government fees, like Doc fee, Electronic Filing Fee, and Tag-Agency Fee to the prices on their “Members-Only Price Sheet”. Costco requires that these be itemized separately on the Member-Only Price Sheet but ARE NOT INCLUDED IN COSTCO MEMBER-ONLY PRICE. 

• Dealer installed accessories like window tint, floor mats, protection packages, nitrogen in tires, stripes, etc. are SUPPOSED to be included in the Costco Member-Only Price Sheet at NO CHARGE TO COSTCO MEMBERS. Be sure to verify that these items aren’t added later for additional charges. 

• On the Costco Website you will be offered the Costco Auto Program Price Verification. It’s VERY IMPORTANT that you check this box giving the Costco Auto Program permission to obtain a copy of your purchase agreement from the dealer. If you’re not contacted by Costco and suspect a problem, call Costco immediately at 800 755-2519.

• Deal Only with the Costco Authorized, Trained Contact(s) at this Participating Dealership. Call the authorized contact and make an appointment. NEVER deal with another salesman that’s not listed on the Costco website. 

• Insist on seeing the official Member-Only Price Sheets (two of them) to verify the price you’re given. One price sheet if just for the car you indicated online that you want to buy. The second price sheet shows all of the cars the dealer offers for sale. The prices are indicated by an amount below or above invoice. A high percentage of cars are usually shown at hundreds of dollars BELOW invoice, because invoice is not the true cost of the car to the dealer.

• Insist on seeing the dealer’s factory invoice on the car you’re buying. You can then verify the amount under or over invoice the dealer has promised Costco they will see this to their members for. 

• Before you sign on the dotted line, be sure that the check you’re writing to the dealership is for the total amount you have to pay plus government fees only…sales tax and license/registration paid directly to the state department of motor vehicles. This amount should be for the amount, under or over invoice, shown on the Costco Member-Only Price Sheet. Dealer installed accessories must not be charged to you, and should not alter the amount below or above invoice you’re charged.

If you believe all the above is very complicated, I totally agree with you. I’ve had many, long discussions with the Costco Auto Buying program about why they don’t simply give you their price online for what you can write your check out for…an out-the-door price. But, with that said, if you do carefully follow the above procedure, you can buy your next new car for a very low price.

Legal Advice When Buying a Car

I’m not a lawyer and I don’t even play one on TV, but I’ve learned a lot from my lawyers, the plaintiff’s lawyers, and my customers in the last 52 years I’ve been a car dealer. I don’t get sued much anymore, but back before I became a “Recovering Car Dealer” I did. There’s something to be said for “The Law School of Hard Knocks”. One thing is that you tend to learn your lessons well and rarely forget. Here are five tips which, if followed by you, can make your car buying experience a lot safer.

• Get all promises in writing. Car salesman love to talk, and most of what they have to say is targeted to induce you to buy the car. Be sure that all relevant promises and comments are written on your vehicle buyer’s order. Not quite as good, but better than verbal, is a confirming email or text from the salesman. Some examples are, “after you buy this car, I’ll be sure you get a free service loaner whenever you bring it in for service”, “Bring your new car back next Friday and I’ll give you a free set of floor mats” and “the blind-side warning sensor is standard on the car we ordered for you”. Probably the most promise by the salesman to get in writing is “this is the out-the-door price plus government fees only.”

• Always bring a friend (witness) when buying. When I have an important meeting or negotiation, I always make sure I have at least one more person in the meeting than the other party. You’ve heard the expression, “He said-she said”. This means that a judge won’t find for one party or the other when both claim something different was said. Furthermore, a car salesman is less likely to make false promises in front of a witness. 

• Get a signed copy of all documents you’re asked to sign. Be sure you get thesebefore you drive the car home. Ideally, you should read these documents, but in reality, no one does, including me. It’s virtually impossible to read and/or understand all the documents (especially with fine print), that you’re asked to sign. I believe that lawyers created these lengthy, voluminous documents unnecessarily and on purpose so that we require their services. Remember that you won’t see any legal documents until after you think you’ve bought the car. You probably signed another document called a “worksheet”, and the salesman and manager might have shaken your hand and thanked you for buying the car, but it’s not official or legal until you sign a lot more documents in the F&I or business office (also called “the box”). There is one very important document you’ll see before you go into “the box” and that’s your credit application. Be sure that you get a copy of that. 

• Get the cell phone numbers of the salesman and key managers. I’ll guarantee that the salesman will almost insist that you give him your cell phone number. Before, you do that, insist that he give you his number, and tell him you want his manager’s cell phone number too. While you’re at it ask for the cell phone numbers for the service manager and general manager. You’d be amazed at how hard it can be to contact anyone in a car dealership AFTER you’ve bought and paid for your car. Even if they don’t answer the phone, you can text your message. This is a matter of record and legally binding. Also, when they know you do have their cell phone number, their likely to be more careful about making promises they can’t keep.

• Ask the F&I/Business manager to delete the Arbitration Clause on the Vehicle Buyer’s Order. Almost every car dealer includes an “arbitration agreement clause” in their purchase contract. You may have bought lots of cars and never seen, but it’s there in the fine, voluminous print. This clause says that you agree not to sue the car dealer for any reason. In other words, it says that you want to waive your right to a judge and jury of your peers, one of your most precious rights as an American.

Whether you want to “stick to your guns” on all these recommendations or not, just using some of them is better than none. Also, by merely asking you’re signaling that dealer that you’re alert and aware. Too many car-buyers are too timid and afraid they’ll offend the nice car salesman or his manager. These are the customers that are most likely to be taken advantage of.

Open Letter to all Florida Car Dealers

SUBJECT: ELIMINATE HIDDEN FEES

Dear fellow Florida car dealer,

I started in the retail auto business in 1968, about 52 years ago, and I have seen a lot of changes in the way we dealers sell cars and the expectations of our customers. My remarks in this column are made sincerely and with a positive intent toward you and your customers. I am not trying to tell you how to run your business; I am suggesting a change that will reward both you and your customers.

Virtually every car dealer in Florida adds several charges to the price of the cars he sells, variously referred to as a “tag agency fee”, “do fee”, “dealer prep fee”, electronic filing fee etc. These extra charges are printed on your buyer’s orders and programmed into your computers. It’s regulated in many states including California. You charge this fee to every customer and it ranges from a few hundred dollars to several thousand. Florida law requires that you disclose in writing on the buyer’s order that this charge represents profit to the dealer. Florida law also requires that you include this fee in all advertised prices. You rarely, if ever, do this.

The argument that I hear from most car dealers when I raise this issue is that the dealer fee is fully disclosed to the buyer on his buyer’s order. But most car buyers are totally unaware that they are paying this. Who reads all the voluminous paperwork associated with buying a car? The few who notice it assume it’s an “official” fee like state sales tax or license and registration fee. Those few astute buyers who do question the fee are told that your dealership must charge this fee on very car which is not true. These astute buyers are also told that all other car dealers charge similar fees. This is almost true, but, as you know, my dealership does not. When my dealership is mentioned, many of your salesmen say that “Earl Stewart hides his fees in the price of the car he advertises”. Of course, we charge no such fees but, if we did, they would be included in our advertised and quoted prices. This gives our customers the ability to shop and compare our honest, total, out-the-door price. You sneak your dealer hidden fees in after the your customer buys the car.

The reason you charge these fees is simply to increase the cost of the car and your profit in such a manner that it is not noticed by your customer. This is just plain wrong. Dealers will admit this to me in private conversations, and some will admit that they have considered eliminating the fee as I have, but are afraid of the drastic effect to their bottom line. By being able to count on an extra $999 in profit that the customer is not aware of or believes is an “official fee”, you can quote a price below cost and end up making a profit. Or, if the price you quote the customer does pay you a nice profit, you can increase that by several hundred dollars.

This “extra, unseen” profit is even better for you because you don’t pay your salesmen a commission on it. That’s being unfair to your employees as well as your customers. When the rare, astute buyer objects to the dealer fee, the right thing to do would be to decrease the quoted price of the car by the amount of the dealer fee. This would have the same net effect of removing it. The salesman won’t permit this because he will lose his commission (typically 25%) on the decrease in his commissionable gross profit.

If you don’t know me, I should tell you that I don’t profess to be some “holier than thou” car dealer who was always perfect. Although, I never did anything illegal, when I look at some of my advertising and sales tactics 20+ years ago and more, I am not always proud. But I’ve evolved as my customers have evolved. My customers’ expectations, level of education, and sophistication are much higher today. Your customers are no different. As I began treating my customers, and employees, better I discovered that they began treating me better. Yes, I used to charge a dealer fee ($495), and when I stopped charging it a few years ago, it was scary. But I did it because I could no longer, in good conscious, mislead my customers. Just because everybody else was doing the same thing did not make it right.

Now here is the good news. My profit per car did drop by about the amount of the dealer fee when I stopped charging it. But when my customers realized that I was now giving them a fair shake and quoting the complete out-the-door price with no “surprises” the word spread. My volume began to rise rapidly. Sure, I was making a few hundred dollars less per car, but I was selling a lot more cars! I was, and am, selling a lot of your former customers. My bottom line is far better than it was when I was charging a dealer fee. You can do the same!

Why am I writing this letter? I’m not going to tell you that I think of myself as the new Marshall that has come to “clean up Dodge”. In fact, I’m aware that this letter is to some extent self-serving. Lots of people will read this letter to you and learn why they should buy a car from me and not you. And, I am also aware that most dealers who read this will either get angry and ignore it or not have the courage to follow my lead. But maybe you will be the exception. If you have any interest in following my lead, call me anytime. I don’t have a secretary and I don’t screen any of my phone calls. I would love to chat with you about this. My cell phone number is 561 358-1474. (Do you have the courage to give your personal cell phone number to your customers and the public?)

Sincerely,

Earl Stewart

Nominate Your Favorite Car Dealership: "Best Of" 2021 Awards

What better way to find out the best and safest place to buy or service your next car than to find out what others’ experiences has been? What better way to help others, than by sharing your own experience?

Your nominations for Best Of 2021 will be accepted up until November 11. Just click on this website,www.NominateBestCarDealer.com. You can nominate candidates in these categories: Best Auto Dealer Service Department, Best New Car Dealer, and Best Used Car Dealer. Please be sure to nominate a dealership for each of these.

The most reliable measure of any company are the rankings given it by its customers. This is especially true of car dealerships because no other retail business can match car dealers for deceptive advertising and unfair and deceptive sales practices. If you have experienced a car dealer that you can trust to buy or service a car from, it’s your “civic duty” to share his name with others.

After all the nominations have been made (deadline November 11), voting will begin in December. Be sure that your favorite car dealer is nominated.

How Can I Learn the Dealer’s Cost on a Car?

It’s 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 thousands 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 kicked back to the dealer after he has paid the invoice. In some cases there are two holdbacks…one from the manufacturer and one from a distributor. Some manufacturers include the cost of regional advertising in the invoice which offsets the dealer’s advertising costs. Another 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 inspection expense which reimburses 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 dealers’ financial statement and some are. Technically a dealer could say that the cost he showed you reflected all 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 (and the IRS) that’s called profit.

Besides holdbacks and reimbursements for expenses, you must contend with customer and dealer incentives (usually referred to as customer cash or dealer cash) 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”, electronic filing fee, tag agency 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 $3,000. If you are making your buying decision on your perceived cost of the car, even if you were right, here is up to $3,000 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 decide 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. You are playing into the dealer’s hands when you offer to buy or he offers to sell his car at a certain amount above his cost. 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.

DON’T GET “SLAM DUNKED” BY A CAR DEALER

Back in the day when I was an evil car dealer, I had a monthly “Slam Dunk Club” for my salespeople. To join the club, you had to make at least a $4,000 profit on a customer. This is about three times the normal profit. The salesman got a $500 bonus on top of his 25% commission of $1,000. He also got a gift certificate to Ruth’s Chris steakhouse with his significant other for a free dinner. Some of my salesmen would “score” slam dunks every month and some several. Others rarely did.

You should know that no two customers pay the same price for the same car in the same car dealership in the same time frame. Each customer pays the highest price his or her salesperson can “extract”. When a Toyota dealer looks at his financial statement at the end of the month and sees his profit per new Camry was $1,500, it doesn’t tell the full story. That $1,500 is the average of all the Camrys he sold with profits per car sold ranging from as much as $10,000 to as little as $100.

You’d think that a car dealer would want all his salespeople to sell all his cars for very high profits like $4,000 or higher. You’d be wrong. The reason is that all people aren’t equal when it comes to education, intelligence, experience in car buying, and negotiating skills. A smart, highly skilled negotiator would never pay a car dealer a $4,000 profit; if the salesman wouldn’t budge on the price, the car dealer would lose a sale. He would rather have a lesser profit than no sale at all…” a half a loaf is better than none”. Dealers study each salesman’s profits on all the cars he sells each month to be sure that he has some very high profits and some very low ones. This is a “healthy pattern” because it ensures the dealer that this salesman is making as much money on each customer as that customer as that customer’s negotiating/buying skills will tolerate. If a dealer sees that a salesman’s monthly profit pattern is in too narrow a range, he’s “not asking for all the money” and/or “he’s walking customers at too high a profit”. Car dealers all believe that you can’t ask for too high a profit on a car because you can always reduce the price before the customer leaves. Most car dealerships instruct their sales people to “start the asking price at above MSRP”.

Those readers of this column who’re familiar with my weekly radio show, EarlOnCars, Saturday mornings 8-10, know about my weekly mystery shopping report. [Tru Oldies 95.9 FM & 106.9 FM WIRK-HD3] My undercover shopper visits a different car dealership each week and goes through the motions of buying or leasing a car. I report everything that happens, naming names and dealerships, and we add that dealer to our “Recommended List” or “Don’t Buy from this Dealer List”. You can read all the mystery shopping reports in my archive at www.EarlOnCars.com. The latest shopping report was my inspiration for this column. You can click on this link to read the entire report.

The salesman who greeted the mystery shopper made every attempt to get my shopper to BUY TODAY, even to the extent of taking the new Camry home to show her husband and even to the husband’s workplace. This, of course, is to be sure that the buyer doesn’t have time to shop and compare the price he quoted. He quoted her an out-the-door price of $28,804. The salesman and the manager assured her that this was a very low price and guaranteed that it was lower than any of the competitive Toyota dealers would offer.

When my shopper refused to listen to them and wouldn’t make a buying decision that same day, they asked her to wait a minute and they’d be back with a lower price...in their words “an even sweeter deal”. They came back with an out-the-door price on the same new Camry of $23,254! THIS PRICE IS $5,550 LESS than the first price they gave her. My mystery shopper left the dealership at that point.

This was, tactically, a very poor way to “sales manage the deal”. A savvier sales manager would have negotiated the price down slower, in small increments. When you drop your price too fast, you can scare the prospective customer away. The customer will think, “if he can drop the price $5,500 this fast, how much more can he drop the price?” The price was a very low price, only about $100 profit to the dealership…a GREAT price. The dealers only hope of increasing his profit was to charge her a high interest rate in the finance office and/or sell her warranties, GAP insurance, and maintenance plans. Or, sneak in some hidden fees on the real papers she signs, because all she’s been shown so far were “worksheets”, not legal documents.

Of course, the best protection against being “slam dunked” is to never buy a car on the first day you begin shopping and always get competitive out-the-door prices from at least three different car dealers.