Law and Rights
The Dayton Busines Journal, like many business publications, say that auto sales are slowing down. It's happening in Denver and nationwide, but what does it really mean for you?
We've noticed a consistent trend over the years, when it comes to manufacturer's quality. It doesn't mean slow sales at all. To understand it, though, you have to realize that new car sales are only a small part of the average dealer's income. "There's a hundred ways to make a buck," we heard a car dealer say once, and we believe it.
Car dealer operations are set up in departments. They make money from every department. New car sales, used car sales, parts, service, F&I, body shop, etc. Car dealers set up each department as a separate income source and then usually pay the manager of each department on a commission basis, in order to force each department to earn make its own profit. That way each department is its own "profit center."
So when sales slow down, what happens?
What we consistently have seen over the years is that when quality goes up, the dealer's service department income goes down. The dealer operator, used to seeing the overall operation earn a certain amount of money, puts pressure on the other departments. The result?
Things that might have been covered by your extended warranty, aren't covered in the service department. The extended warranty being sold in by F&I costs a little more. Your insurance company gets a body shop estimate that's a little higher than expected because of "hidden" damage. These costs are often hidden from the consumer in one way or another.
Instead, more customers start hearing about "negative trade in equity" and other scams that cost you money. But where do you see it most?
Well, usually when one department's income goes down, the pressure is on for another to go up. What we have often see over the years is that when new car sales go down (like right now), the fraud in the used car sales department goes up. Best example? Last week.
Last week we had three different consumers call us for help from different parts of Ohio and in each case they had been sold a wrecked car without knowing it. That's doesn't surprise us.
If you read in your local paper that new car sales are down, be careful. That's not the time for you to get a tune up at your dealer, no matter how much you trust them. That's not the time to go used car shopping either.
You have to be careful. Car dealers are out to make a buck and if they don't make it in the new car sales department, you can bet they're making it somewhere else. Don't let it be off you.
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- What Are The Most Common Types Of Consumer Complaints In Ohio?
Each year Ohio Attorney General DeWine adds up all the complaints they have gotten from consumers in the last year and sees which area has the most. As usual, it's car sales that is in the Number One spot again. The 2015 top complaint categories...
- How Car Dealers Make Their Money Might Surprise You - The Profit Mostly Comes From Everything Else
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Law and Rights
Sales and Fraud Seesaw
The Dayton Busines Journal, like many business publications, say that auto sales are slowing down. It's happening in Denver and nationwide, but what does it really mean for you?
We've noticed a consistent trend over the years, when it comes to manufacturer's quality. It doesn't mean slow sales at all. To understand it, though, you have to realize that new car sales are only a small part of the average dealer's income. "There's a hundred ways to make a buck," we heard a car dealer say once, and we believe it.
Car dealer operations are set up in departments. They make money from every department. New car sales, used car sales, parts, service, F&I, body shop, etc. Car dealers set up each department as a separate income source and then usually pay the manager of each department on a commission basis, in order to force each department to earn make its own profit. That way each department is its own "profit center."
So when sales slow down, what happens?
What we consistently have seen over the years is that when quality goes up, the dealer's service department income goes down. The dealer operator, used to seeing the overall operation earn a certain amount of money, puts pressure on the other departments. The result?
Things that might have been covered by your extended warranty, aren't covered in the service department. The extended warranty being sold in by F&I costs a little more. Your insurance company gets a body shop estimate that's a little higher than expected because of "hidden" damage. These costs are often hidden from the consumer in one way or another.
Instead, more customers start hearing about "negative trade in equity" and other scams that cost you money. But where do you see it most?
Well, usually when one department's income goes down, the pressure is on for another to go up. What we have often see over the years is that when new car sales go down (like right now), the fraud in the used car sales department goes up. Best example? Last week.
Last week we had three different consumers call us for help from different parts of Ohio and in each case they had been sold a wrecked car without knowing it. That's doesn't surprise us.
If you read in your local paper that new car sales are down, be careful. That's not the time for you to get a tune up at your dealer, no matter how much you trust them. That's not the time to go used car shopping either.
You have to be careful. Car dealers are out to make a buck and if they don't make it in the new car sales department, you can bet they're making it somewhere else. Don't let it be off you.
Burdge Law Office
www.UsLemonLawyers.com
Helping Consumers Since 1978
www.UsLemonLawyers.com
Helping Consumers Since 1978
Subscribe in a reader- What Are The Most Common Types Of Consumer Complaints In Ohio?
Each year Ohio Attorney General DeWine adds up all the complaints they have gotten from consumers in the last year and sees which area has the most. As usual, it's car sales that is in the Number One spot again. The 2015 top complaint categories...
- How Car Dealers Make Their Money Might Surprise You - The Profit Mostly Comes From Everything Else
Once upon a time there was a mega-dealer in Columbus that sold more cars and made more money than anyone in the county. Then it was the region. Then it was Ohio. Where are they now and who?s #1? Well, apparently it isn?t the guy with the guitar anymore....
- If The Dashboard Warning Light Is On - Watch Out - That Car May Be A Lemon!
When you are car shopping, it is common to test drive the car you are thinking of buying. What should you do if there is a lit up warning light on the dash? What if you hear a strange noise or the car doesn't run right? Watch out, that car may just...
- Negative Equity Gets More Negative
It's everywhere. Reports of a rising recession, layoffs, abandoned factories, bankruptcy threats and more. And now, some hungry car dealers are starting to show it in the paperwork we are seeing. There's more (and higher) negative equity numbers...
- Jaguar Best In Quality Survey
Jaguar comes in best, at the top of the heap, in the 2006 JD Power quality survey for customer satisfaction for the third year in a row. The new car quality survey is based on more than 42,000 new vehicle buyers and looks at dealership facility, salesperson,...