Aggressive Tactics and Poor Management Catch Up With Arizona Dealer

on Sep 22 in Accurate Auto Advice tagged car dealer tips by jasonl

Would you shop at a car dealership that the U.S. Army officially forbade its military men and women from visiting? Would you buy a vehicle from a salesperson that has a history of calling the police on his customers, and lying to them about their warranty?

No? Neither would I, and neither would a lot of people, which is why Arizona dealer Rick Johnston (who runs Wildcat Mitsubishi in Tuscon and Ideal Automotive in Sierra Vista, Arizona) is in so much hot water right now.

For the time being Rick Johnston, along with his sons Beau and Heath, owns and operates two auto dealerships in Arizona. Yet in light of recent allegations directed at the Johnston family, it’s likely that the Johnston’s days or running car dealerships are running out. Just last month Fort Huachuca Army Base officially banned all of their military men and women from buying a car at either one of the Johnston’s dealerships. Army spokesperson Tanja Linton said, “We were concerned that our service members were being taken advantage of.”

Victims of illegal and/or aggressive dealership sales tactics are often reluctant to share their experiences, but U.S. Army soldier James Tuman has been speaking openly about his experiences.

Tuman had a motorcycle and SUV that he traded in for a used car from Johnston’s Ideal Automotive. After driving the car Tuman quickly learned it had several mechanical problems. When he tried to return the car, Ideal Automotive said that they would not accept his return or provide a refund. Instead, they offered to take back the car and sell him a different one. Tuman, unsatisfied, said he was going to make an official complaint instead. Ideal Automotive responded with threats, saying that they would declare the car “repossessed” if he didn’t fulfill his obligation. Since a repossession could affect Tuman’s security clearance (the military has rules forbidding soldiers with repossessions to hold high security clearance), Tuman was forced to accept the dealership’s mistreatment or jeopardize his career.

Tuman is not alone. Since 2005, the Arizona Business Bureau has reviewed 30 complaints against the parent company of these two dealerships, Johnston Shield, Inc.

The complaints against these dealerships range from refusing to return a deposit, selling trade-ins before deals were finalized, and incorrectly claiming that parts were covered under warranty. According to the Arizona Star there are also claims that the Johnstons sold damaged vehicles and even called the police on customers for what appear to be unfair reasons.

It’s not just the issues with the customers that have the Johnston’s under fire. In July the company filed bankruptcy stating the company owed more the $2.1 million to unsecured creditors including more than $1 million to the IRS and about $283,000 to the Arizona Department of Revenue for sales tax and payroll tax.

Other indiscretions include making finance deals without a license for two years. Although they now have a valid license, the dealership could face serious fines of up to $5,000 a day for each violation. The dealership is also getting heat from the Transportation Department for continuing to issue temporary license plates. There was an order in place to stop them from doing so because the dealer issued plates with the wrong VINs on five separate occasions. This violation will likely mean more fines.

With the mounting expenses, reduced customer base, and bad publicity, the future for Johnston Shields, Inc. is not so bright.

Just a quick search on the Web will turn up a variety of not so savory reviews. Including this one from MerchantCircle.com: “If I could give this business negative stars I would. This company (ran by ex-cons) have done numerous customers wrong and have violated a variety of laws in the process.”

To be fair there are positive reviews on other sites like Edumunds.com. I’m not about to say that everyone has had a bad experience at the Johnston’s dealerships, but from what I can tell most of those that are speaking up don’t have much nice to say.

The lesson? When car shopping, take the time to read online reviews of your local dealers. While every dealership is going to have negative reviews (it’s the nature of the business), watch out for dealerships with an inordinate amount of negative complaints.

After Warranty Assistance: Warranty Coverage For Vehicles Outside Of Warranty

on Mar 19 in Maintenance & Repairs tagged car dealer tips, repairs, Warranties by jasonl

Recently, I came across a story about a person with a 2004 SUV that needed a really expensive repair, all because of a leaky $4 O-Ring. The problem – the warranty on this person’s SUV is for 5 years or 60k miles, but the SUV has 95k miles on it. It was past the mileage limit (but still inside the 5 year time limit).

What can a person do in this situation? Since the part is not 5 years old yet, isn’t there something the dealer can do to warranty this repair?

The good news is there’s something called “after-warranty-assistance” for people in this situation – provided the person with the problem is the vehicle’s original owner (if you bought the car used this won’t help you). After warranty assistance won’t cover all your costs, but it might make a big dent in the total bill.

Basically, after-warranty-assistance (AWA) is an un-official program between a car manufacturer and their dealer (most large automakers offer some version of this program). Under an AWA claim, a dealer can offer a reduced labor rate and/or free parts on something that failed outside the terms of the warranty, provided there’s some “gray” area in terms of miles and/or years. For instance, when I was managing at a Ford dealership, I once got Ford to cover a broken A/C compressor on a used Explorer. The SUV was 5 years old, but it only had 20k miles. So even though it was outside the time limit on the 3/36 warranty, it was inside the miles (these were the days before Ford’s 5yr/60k mile powertrain warranty). I remember the service manager working with me on a couple of high miles vehicles that were less than 3 years old. Same goes for my time at a Toyota dealer.

Typically AWA is granted on a percentage basis – from 20% of the cost of the uncovered repair all the way up to 100%. If you’re still inside part of your manufacturer’s warranty (or even if you’re just outside it) you’ve got a shot at AWA.

If you want to improve your chances of being granted some AWA from your local dealer, I would suggest the following:

-    Pull all your maintenance and repair records for your vehicle. Hopefully you’ve had this work done at your local dealer. This will prove you take care of your car and that you’re a loyal customer.
-    If you own or have owned any other vehicles of the same make (GM, Ford, Dodge, etc.), make copies of the registration for each. This will show the manufacturer you are a long term owner of their product.
-    Be nice to the people at the dealership – these AWA requests take a lot of work on their end. If they don’t like you, you’re not going to get much help.
-    Follow up with the dealership’s GM and service manager – these are the two people with the most power to help you.
-    Explain that you understand you’re going to have some out of pocket expenses. Even if the dealer can’t get AWA from the manufacturer, they might be willing to split some labor costs with you in the interest of customer service.

If none of this works (or if you aren’t the original owner of this vehicle with the problem), you might ask the dealer about what they can do towards a trade-in. Maybe the service and sales departments can work out a way to get you full value for your vehicle, even though it needs an expensive repair.

If you want to keep your vehicle, a local independent repair shop might be able to cut your bill in half. They might be able to get you a refurbished part as well. The service advisors at your local dealership can probably recommend a couple of places that do good work for less money (with a little buttering up).

Have a service problem that you’d like some advice with? Contact us!

Car Buying Negotiation Tips: Patience and Walking Away

on Nov 19 in Buying tagged car buying tips, car dealer tips, negotiation tips by jasonl

When it comes to buying a car, be patient, and don’t be afraid to walk away.

First of all, patience is a blessing when it comes to buying a car. Any buyer that doesn’t have to buy right away has the advantage. Sellers have to sell within a certain amount of time. A private seller might only have the weekend to sell a car, while dealerships usually have no more than sixty days to sell a used car. As for new cars, the dealership has only three or four months before they decide that it’s an old piece of inventory and they have to sell it. So if you have patience, and you don’t have to buy the next deal that comes your way, you might be able to go back to a dealership in a month or two and make an offer that’s a little low and get the car just because it’s a little old.

One of my best car buying tips is that you should always be willing and able to walk away from an offer. This can be your best negotiation strategy. By walking away, you make sure that you’re getting the seller’s best offer. Here’s why:

• Most sellers (private or dealership) realize that if you leave, you’re probably not going to come back. They have one shot to sell you a car.

• Sellers know that they need to make you their best offer before you go – they feel that if they tell you their best price and you still leave, then it just wasn’t meant to be.

• Here’s the best part of the “walk away” strategy: if you tell a salesperson or a private seller, “Thanks, but this just isn’t the deal that I’m looking for,” and you leave, they might call you in two hours to say they’ve got a better price.

• If you don’t hear from the seller, and you really want the car, you can always call them back and tell them you’ve changed your mind, that you realized it’s a nice car and a pretty good deal, that you’re willing to take it now, etc.. You can do this and know that you’ve negotiated for the best price while also saving face.

As always, take your time when buying a new or used car. Do your car research, get multiple used car financing quotes, and feel free to contact us with your questions.

Dealer Financing Basics: What To Expect

on Nov 19 in Financing tagged car dealer tips, Car Dealer Tricks, Financing by jasonl

When it comes to buying a car from a dealership, it’s important that you know about some of the things they are going to offer you in the finance office. Here’s a basic explanation of each.

First, they’re probably going to try to sell you a vehicle extended warranty or service contract. Both have saved people lots of money, and they’re a good idea in some instances. However, they are usually overpriced at the dealership, so make sure you shop around.

The finance office will also offer you GAP protection (also called Gap Insurance). It’s usually fairly inexpensive (about $5-10 per month). GAP protects you if your car gets totaled – if your car is totaled, your insurance company will not pay you what you owe on your car – they’ll only pay what they think the car is worth. If you’re in a situation where your car depreciates faster than you can pay it down (which is a situation about 90 percent of Americans find themselves in, especially when they buy brand new cars) and your car gets totaled, you can end up with a large difference between your loan amount and what your car is worth. In other words, if you’re financing, you should seriously consider GAP insurance.

The finance manager may also offer you a security system of some type. You’re not likely to get a decent security system at a dealership, new or used. If you want one, you’re better off going to your local Best Buy, Circuit City, etc. They have good security products their and they often offer free installation. They’re also less expensive than the dealership.

The finance manager will also offer window etching, and it is a total rip-off. The dealership will etch either your VIN number or some identity number into each piece of glass on your car – it’s a great concept, but the value of the product is only about $30-$40. Unfortunately, dealerships charge anywhere from $99-$800. It’s a bad deal and I suggest you avoid it unless you can get it cheaply (or free).

The finance manager may also offer you a “clear bra” or clear hood protector. This is a good idea – if it’s a quality product that’s correctly installed, it will protect the front of your car from damage. But, like most things the dealership will try to sell you in the finance office, it’s probably overpriced. I’d suggest you negotiate the price with them, but a “clear bra” is definitely worth buying.

The dealership will also offer you something called credit insurance. The basic concept is this: if you die or you become injured or disabled, credit insurance steps in and makes your car payments for you or pays your loan off. This is a bad deal. If you really want this type of credit protection, call your local insurance provider and get it from them – they’re going to give you a much better deal than the dealership will.

The bottom line with all these products, and any other deals they might offer you, is this: You should consider everything the finance manager offers you – 90 percent of it is valuable and worthwhile. Just remember that most of the products he or she offers you will be overpriced. They’ll probably try to charge you much, at least much more than you can get elsewhere, so your strategy should be to tell the finance person, “I want it, I really like the idea, but I want to sleep on it, so can I call you back next week?” This gives you a chance to shop around, and you’ll most likely get a better deal somewhere else.

As always, take your time when buying a new or used car. Do your car research, get multiple used car financing quotes, and feel free to contact us with your questions.