Dealers lobbying in DC
Car dealers are lobbying heavily in DC, trying to avoid being covered by a new predatory-lending law. Dealers were successful in getting an exemption from the House of Representatives, which bought the logic that car dealers never, ever ripped off their customers.
There are good and bad car dealers, just as there are good and bad banks, but there is a reason car dealers sit near the bottom of the reputation scale (which generally keeps nurses and pharmacists on top, in case you wondered).
To quote from Gallup:
Car salesmen firmly anchor the bottom of the list with a majority (55%) saying they have low or very low ethics. No other profession comes close to this level of disparagement. This is not a new finding; car salesmen have been at the bottom every year they have been included in the list, except for the three occasions when telemarketers were included and essentially tied car salesmen for that unwelcome distinction.
Car salesmen managed to beat salesmen, senators, and lawyers for the bottom spot. They even beat HMO managers, insurance salesmen, and advertising people. That’s hard to do and it’s hard to believe there’s no reason for it.
Yes, there are many good and honest car salesmen and loan officers. I personally know a few myself. But there are also numerous purveyors of sleaze, and those are the people the law is meant to watch out for.
A large part of the law is disclosure, because apparently there are major problems with bait and switch, false claims, incorrect numbers, and other issues that really should be sitting in the past.
The military came out in favor of applying the law to car dealers, as well as banks (which score higher in the surveys despite recent scandals).
That’s why it amazes me that NADA has sold the idea that car dealers never cheat anyone, especially with regard to auto loans.
Some military groups, President Obama, and Secretary of the Army John McHugh agree that the exemption is inappropriate. McHugh said that “many of our soldiers have fallen victim to predatory lending practices and have entered into contracts for prohibitively expensive financial products promoted by some unscrupulous car dealerships and lenders,” and Undersecretary of Defense Clifford Stanley found evidence of numerous sleazy practices, including falsification of loan applications, at the expense of soldiers and their families.
President Obama portrayed the law as primarily enforcing standards of information clarity.
NADA said the new law would have “unnecessary, burdensome and overreaching rules [that] will only limit auto finance options and hurt the consumers which the new agency is seeking to protect.”
A large part of the public argument has been the usual NADA rubbish about government regulation being bad and the government having no place in business. I call it rubbish because NADA very quickly gave up its libertarian principles when it wanted something from the government. GM and Chrysler, on declaring bankruptcy, had every legal right, if not every moral right, to cancel contracts with their dealers, as they did with their suppliers. But NADA got Congress to come in and fix things for them.
The crazy thing about NADA in that case was they claimed they were standing up to government intervention in the marketplace.
By having the government say what a business couldn’t do to another business.
Many dealers only have their franchises in the first place because the government has so many rules and regulations surrounding franchises. That’s a good thing because franchise owners would otherwise be regularly abused (as, in fact, they are in some lines.) But because of government interference in private industry, an interference staunchly defended by NADA, American automakers have been unable to jettison dealers that had practices which were truly indefensible – like stocking their cars solely to draw customers in and then compare them unfavorably to some more profitable import. Or the aforementioned loan practices. Or consistent fraud around repairs and service.
NADA has every right and obligation to stand up for their dealers, including the lousy ones. But it shouldn’t wrap itself in principle and the flag as it does so. It should, instead, adopt the stance of the ACLU: they are defending the worst so the best won’t be abused. Indeed, some dealers that were kicked out by Chrysler seem to have been very good ones that should have been kept.
Of course, NADA could follow the example of some professional groups and kick the worst offenders out, voluntarily adopting standards of ethics. But that won’t happen.
Having been both a car salesman and a dealer finance manager I find it disheartening that NADA would be against full disclosure when it comes to financing. What are they afraid of? Their contention that this law would limit financing options is pure BS…..unless of course they fear full disclosure of terms of certian programs would have customers conciously avoiding certain financing options because they’re a bad deal. I certain don’t think educating the customer and letting them make the choice that’s right for themselves is detrimental to the car selling or financing business. It’s like everything else in life, you collect the data, analyze the pros and cons, and pick the one that fits you needs and balances your risk.
I also find it offensive that there are some in the business that would purposely target our fine military personnel and rip them off somehow. Kind of offsets any military rebates the manufacturers offer, doesn’t it?
Personally, the dealers I worked for always made sure the customer understood all the numbers on the sales agreement and the financing/leasing documents so there was no misnderstanding. Payments, interest rate, life/disability insurance if they wanted it, the term of the loan/lease, trade-in dollars, extended warranty, add-on accessories, etc. No surprises. If someone didn’t qualify for a low interest rate, you just broke the news to them that their credit score didn’t justify it. That’s just life. That doesn’t change if they go to antoher car dealer. They’re stuck with that no matter where they go.
Who wants a customer coming back into the showroom the following week after their brother-in-law the lawyer had a chance to review the documents and start pitching a fit? Send them out the door with no lingering questions and they’ll be a much more satisfied and loyal customer.
I absolutely agree.
I also find it sad that an otherwise excellent dealer quoted me an interest rate of 9% (“the best we can do”) and when I got a bank to quote 7%, suddenly they were able to find a better deal.
Screw the NADA. Many of their member dealers have screwed their customers, the very people they depend on for their livelihood.
This law will not hurt the honest dealers who take the time and are on the up and up to begin with. In fact, the NADA’s actions in challenging this law only points out their rush to support the rotten apples.
The NADA is made up of dealers, all types, honest and dishonest. As the total number of dealers in the US is relatively small as compared to, say the AMA, the ratio of honest/dishonest is likely higher. And there are many that point to the AMA and say it will protect bad doctors.
I worked for several different dealerships, always in the Service department as an Advisor or other management position. We get the customers view of the entire workings of the dealership from our dealings with them. They sure like to talk, And some of what they say requires investigation for us to do our jobs, especially when it comes to extended warranties, promises made on delivery and so-forth. I worked for a couple very honest dealers and many mostly honest dealers. I never worked for a dealer that did NOT do a shady deal here and there. Even if the dealer principle or a department head wants it right, there are personnel that are looking to pad the pockets.
I’ve stated this before; the car business is tough and many in it are ruthless. I do NOT support more and more government intervention, as much of it is not needed and can be harmful to industry and the public at large. Plus it is always expensive. However, the government’s job is to enact and enforce laws to protect its citizens where needed. This IS one of those areas.
Well, let’s face it, a lot of the consumer protection laws that are on the books today are there because of car dealers. A lot of states adopted a titling system because of all the shenanigans. We certainly had our share of unscrupulous ones here in the Boston area. In fact, Jay Leno worked as a lot boy for one of the most infamous when it came to shafting the customer: Wilmington Ford. Don’t blame Jay, he was just the lot boy after all.
My dad made the mistake of doing business with Boch Dodge back in ’66. Rumor has it that Ernie Boch, Sr. eventually lost the Dodge franchise because Chrysler got too many customer complaints of shady dealing. His son got the Dodge franchise back after his father passed away a few years back. I guess Chrysler could hold a grudge. He has since let it go so that the local Chrysler-Jeep dealer now has Dodge under the same roof and now he sells Maseratis and Lambos out of that location.
With Boch, it was a classic ploy. Write up an order “subject to” and let the customer take a demo home for the night to see how you like it. Meanwhile, they’re selling or wholesaling the car you left behind because titles didn’t exist. Now what do you do? You come back the next day and your trade-in is gone, you have no car, and you’ve signed a sales agreement. They shrug their shoulders and say “I thought we had a deal?” Guess you’re buying a new one whether you like it or not. That’s how our ’64 Polara got replaced with a ’66 Coronet 440 wagon. My father was furious but felt the process to get a lawyer or get the Attorney General involved would take too long and not necessarily bear fruit. Lesson learned though.
Today, not only do you have the title to protect you, but the law gives you a few days to back out of any contract and get your deposit back.
I do agree with everyone about the sleaze dealers, and they are out there, in fact, too many! In fact, I don’t know how they kept their franchise when compared to the GOOD dealer that lost their Chrysler franchise, but the DODGE dealer, 4 miles down the road from me, regularly rips everyone off in ANYTHING they do. They quote a price for work on a vehicle, but neglect to tell you that they have this so called “shop tax” which adds a $20 charge to your bill, no matter what is done. I wouldn’t take a bicycle to NAPLETON DODGE. They put on $25 dollar wind deflectors over the windows, call it an “aero package” and jack the base price up $1,800!! NAPLETON sprays on canned SCOTCH GUARD, calling it a “cloth protection” package for $1,200. Nice guys, huh??
BUT, the consumers are no better in a whole lot of cases too. Buy a trade in, and when it is brought in for the new car. Suddenly, it has lousey tires replacing the good ones that were on it, when it was bought by the dealer. A barely powered up battery replacing the fairly new one that was in the car. A cheap radio replacing the original AM/FM unit. It becomes the car that the dealer DID NOT buy, losing much of the value that the dealer had agreed to buy when originally presented.
My experiences,(particularly at Chrysler-Dodge-Jeep dealerships) have been uniformly negative. Notwithstanding my love for Chryslers, getting through a dealership experience unscathed is virtually impossible. I have sadly come to the conclusion that I will probably never buy another new Chrysler product unless I can find a GOOD dealer in my area. I would be willing to bet cash money that Chrysler’s lower market share has a direct relationship to people’s treatment by the dealer body. I know many people who WILL NOT consider Chrysler because of negative dealer treatment in the past. IMHO this is Chrysler’s most persistent problem today; How do you draw back the(very many)customers you’ve alienated over the past years? I know that I will never return to the several Dealerships I have dealt with in the past, but there are still a few left for me to try in my metropolitan area, maybe I’ll get lucky, but I do know that I’ll be checking out other peoples experiences first, long before I walk into another C-D-J dealer.
jimboy, I think we’ve all experienced bad dealers regardless of the make of car, but dealers for American manufacturers seem to take the cake when it comes to lousy customer service. I will defend some for being put in the middle by the manufacturer and being left to deliver the “bad news”. However, often they treat customers like an annoyance or like idiots and expect us to take it.
I consider myself luck in that the three local C-D-J dealers near me all seem like pretty good people both on the sales and service ends of the business. Then again, I haven’t really ever had a major problem with any of my Chrysler vehicles. The last issue I had was the clear coating coming off my Jeep wheels in less than a year after purchase and it was the Chrysler zone rep. that wouldn’t fix or replace them. Can’t really blame the dealer for that.
I have had bad experiences with other C-D-J dealers, and thankfully, they’re all out of business now. We lost about 7 of them here before Chrysler even took out the scalpel. I had done business with one of them for years, having purchased 4 vehicles from them. They got a new service manager who made the mistake of p*ssing me off on Day 1 over something trivial. I turned around and walked out and had my car serviced by a diffrerent dealer that day and I never went back. Now they’re gone. Makes me wonder how one of the highest volume dealers with a long history managed to put itself out of business.
Chrysler DOES have to get serious about improving customer relations. Not only at the dealer level, but at the corporate level too. My suggestion to them is to be very flexible when it comes to warranty claims. Bend over backwards to earn our business. I’d make free loaner cars part of the package for 5-star dealers so that 5-star actually has something tangible to offer customers. Chrysler can’t just match the competition, they have to go beyond that in every aspect of their business.
Thoughtful and insightful point. Certainly well worth consideration in vehicle selection. From my experience with Napleton Dodge, I wouldn’t buy a can of even USED oil from them, let alone a vehicle. You can smell RIP OFF when you walk in the door! Now that makes me alienated, AND there is a HUGE Chrysler-Dodge-Jeep dealer in Orlando that I also had a VERY bad experience with concerning service. They changed the brake fluid on my 5 year old Chrysler, claiming that it had water contaminents in it. Then they could not get the air out of the system…… which meant that every time you stepped on the service brakes the pedal would slowly sink all the way to the floor, and the brakes would not hold after the pedal went down. I was told by no less than the service manager that this was “NORMAL” and that they ALL do it! I was stunned at first but I let him know how full of absolute horse manure he was! Hydraulic systems don’t operate with air in them, and sure as they were on that vehicle it didn’t come from the factory that way!!! It cost me more money at “just brakes” to get the job done correctly. I was NOT given compensation by the Chrysler dealer. Since the ownership has not changed, I won’t change my mind and do business there again.
I hope that Marchionne can do something to achieve a higher level of customer care than is currently available at far too many dealers.
Curtis, the problem you had is unfortunately very common. Chrysler has a little software routine that helps mechanics bleed the brakes, but you are NOT the first person whose dealership doesn’t read the TSBs and apparently doesn’t train its mechanics, so they don’t know about it; or they just don’t care. “It’s computer stuff, just a waste of time.” And there goes the work of dedicated engineers in Auburn Hills, down the toilet along with Chrysler’s reputation.
I suspect Fix-it-first scores were a HUGE part of the decision making process and that’s something most customers might not see. Even when customers return dozens of time for the same problem, they’re more likely to blame the manufacturer, who they cannot see or put a face to, than the poor guy explaining to them why it’s the manufacturer’s fault or that it’s a darned shame they can’t figure out the problem because they’ve never seen it before, without bothering to check with Auburn Hills or read the freakin’ TSB for once.
I’ve seen that so many times now… there’s a REASON those guys write service bulletins. It’s not for fun or because they want to shove stuff down dealer throats.
I’ll give you an example of an outstanding dealer….that probably had the backing of the manufacturer too.
The CEO of one of my old employers had a new Volvo Cross Country. He and I used to compare notes since I had a few Volvos too. His car had a vibration in the driveline that the dealer had tried to solve. They had even looped the factory guys into the problem and nobody could resolve it or even identify what was causing it. Well, he had dropped the car off for a routine oil change and told them the vibration was still there (fourth time he asked them to address it). He wasn’t even to the point of being that aggravated about it. So he gets a call about mid-day at the office and the dealer tells him they’ve given up on the car and they’re just going to take it back and for him and his wife to come down and pick a new one off the lot. Do you think Chrysler would EVER do that for a customer? Not unless you had your lawyer involved and had filed a complaint under your state’s lemon law. THAT is what I call customer service. Just get in front of the problem and you’ll probably have a customer for life. Not to mention they’ll tell all their friends and relatives what a pleasure it is doing business with you.
Yes, Dave, I found out about the computer when the “Just Brakes” guys plugged their unit in, and within a few moments, I had good, tall pedal brakes, like Chrysler meant them to be! It wasn’t free service, but worth the money for peace of mind.
ScottB, in 1975 I bought a hot new Plymouth Road Runner. It was gorgeous, and pretty much loaded with good options. It was a 400 V-8 with a ThermoQuad and dual exhausts that formed into a “Y” just before the real axle hop over. I found 22 defects in that car on the first day! It could NOT keep a carburator on it, cracking the bottoms as fast as the dealer could put them on. The transmission, which was VERY UNTORQUEFLITE like, split right down the middle in the center of town one day, spitting transmission fluid all over the place. The dealer’s service department was run by a real jerk. I think he felt he got paid by how much he could piss off a customer. I NEVER did get that car cured of all it’s ills, and the Manager would shrug her shoulders. I called the Chrysler zone people who came and checked the car out. After a nearly year long hassle, they gave me a 1975 Valiant with a 318 V-8. Guess what? It was as big a lemon as the Road Runner! The transmission was leaking RIGHT ON THE LOT when I drove it away. The soft plugs in the engine kept leaking and/or blowing out. The ills were too numerous to go into much more detail. After 4 more months of screaming matches with the stupid service manager, the DEALER himself offered me a new 1976 Plymouth Arrow. I took it. It was a great move. But, even though the Dealer himself FINALLY did something, does not mean that I would go back there again, ever to do business! He should have FIRED that service manager FIRST. I doubt that there was ever another settlement like that, however, it COULD happen IF the dealer were more interested in customer’s.
I’ve had bad experiences with all three manufacturer’s dealers as well as a Nissan dealer. Dealers seem to be prone to this odd group-think related to customers where we must be really stupid having actually bought something from them. The GM dealers seemed to try a bit harder but the high cost of repairs or service at that dealer made the Chrysler dealers pale by comparison.
The Nissan dealer pushed me into doing a lot more work on my own since the parts markup was close to %200 higher than at a local parts store even for OEM parts in some cases which turned out could be ordered if you go to the right place.
The Ford dealers in our area were the sleaziest of the bunch. It only took two purchases to prove that.
There are seven local Chrysler dealers in my area (15-20 miles). Two I used to consider returning to when one decided to lie to me over the phone recently about how many oxygen sensors my car has (there are two: one above the CAT and one right in the middle of it which failed recently). Now there is one. For $42 I avoided them and took care of the problem myself.
I now also have a code scanner to play with since I needed to reset the ECM after replacing the O2 sensor. They cost a lot less than you think they do these days and the extra features do not mean much if you really have that much of a problem since you will end up taking it into the dealer anyway.
I was disappointed at their attitude. I suspect that the service manager thought he could bully me into returning the car to the dealer. There are some parts that are not covered under the federal mandate and we both knew this. Oxygen sensors are prone to poisoning. This was actually the second time since the same dealer tried to charge extra for spark plugs as part of the 30K miles service. “It’s optional”, he said. “No it isn’t! It’s in the damn manual!” says I and showed him the ticket pulled out of the manual that they give you to use at the service department.
I’m sure we all have our share of horror stories when it comes to dealers. My father had some pretty good run ins with GM and Ford dealers. It really makes you wonder though, how after decades of being “bested” by the competition, they still treat customers terribly at times. I think some dealers are truly too stupid to realize it HAS cost them business over the years. It’s not like it’s a magic formula. Treat your customers right and they’ll keep coming back. Treat them like dirt and they’ll be buying elsewhere in the future.