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Now browsing: Hometown News > Business Columns > Earl Stewart

Earl Stewart
This Week | Archive


I dare car dealers to answer one question about dealer fee
Rating: 3.15 / 5 (39 votes)  
Posted: 2012 Jul 20 - 02:53

Earl Stewart is the owner and general manager of Earl Stewart Toyota in North Palm Beach. The dealership is located at 1215 N. Federal Highway in Lake Park. Contact him at www.earlstewarttoyota.com, call (561) 358-1474, fax (561) 658-0746 or email earl@estoyota.com.

Listen to him on Seaview AM 960, FM 95.9 and FM 106.9, which can be streamed at www.SeaviewRadio.com every Saturday morning between 9 a.m. and 10 a.m.

Why don't you include the profit you make on your dealer fee in the price of the car you quote to your customer?

If you will answer this question truthfully then I pledge never to raise the issue of the dealer fee again.

The reason I do hear from car dealers and the Florida Auto Dealers Association, FADA, as to why most car dealers charge a dealer fee is that it's an "economic necessity." Dealer margins are so low, the economy is so bad and car buyers are so armed with information on dealers' costs and profit margins via the Internet that dealers need the extra profit they make from their dealer fees.

OK, I'll give you the benefit of the doubt and stipulate that this is a fact. I won't even argue that I don't charge a dealer fee and have been profitable for many years and even through this Great Recession.

Now answer my question because you can still charge the extra profit you must have to survive economically if you simply include your dealer fee in the prices of the cars you sell.

Don't add the dealer fee to the price of the car after the customer commits to buying at a lower price. Don't hide the amount of your dealer fee in the fine print. Don't tell the customer that the price is plus tax, tag and fees fooling her into believing "fees" are state, federal or local taxes. Don't tell the customer that "all dealers charge a dealer fee," which you know to be untrue. Don't tell her the law requires you must charge her the dealer fee because you charge others, which you also know to be untrue. Don't tell the customer the dealer fee is not a profit but expenses that you must recoup such as doc fees, preparing the car for delivery and administrative costs.

When you went to school you should have learned in economics 101 that the definition of profit is "the difference between the selling price of a cost or service and its total costs." Besides, you don't even pay to prepare your new cars for delivery because you are reimbursed by the manufacturer and you are not allowed by law to charge doc fees.

When I ask car dealers or FADA officials this question they always give me the same answer: "Hamma, hamma, hamma," just like Ralph Kramden of "The Honeymooners" TV show. You know what I mean, the deer caught in the headlights or the politician on "Meet the Press" when the moderator shows the video of something the politician said on camera two weeks ago that directly contradicts something he just said.

OK car dealers and FADA, if I'm wrong about this, here's your chance to shut me up about the dealer fee forever. All you have to do is give me a truthful answer to this question: why don't you include the profit you make on your dealer fee in the price of the car you quote to your customers?




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