The Snake House

First, re-read this article: Click Here. 

Let me give a couple of examples:

Dealer in Florida calls and asks me to help him remove the Sales Tax from his Dealer Fee. He says his CPA advised him that since delivering a car is a “service,” the fee is non-taxable.

According to the Florida Department of Revenue’s GT400400 (available here) they specifically state that Dealer Prep is a taxable item. I tried to give the dealer the link, even told him what page to find the wording on. He got angry, and told me that his CPA should know what he is talking about, and to just “fix it” so he is legal. I asked the dealer again to have his CPA read the GT400400, or at least have him call the Department of Revenue or guidance. He refused. I showed him where to remove the tax on the fee.

Same dealer calls me back 6 months later. The DOR sent him a notice that says he has underpaid his sales taxes, by the amount of tax on the Dealer Fee, and not only wants the money paid immediately, they have also penalized him. Now, the dealer wants to know if I am going to pay his penalties and taxes because, and I quote, “let him do it wrong.”

Short answer: No. I tried to get him to put on his snake boots, and told him that he was going to get bit. All he could see was saving a few bucks per sale.

Too many people let their greed blind them to the truth.

A dealer called me once complaining that her state Used Car License Board is considering suspending or revoking her license. Why? Because she thought that when it is a Cash Deal, that you just hand the title to the customer, and let them process it, and pay the sales taxes. I asked her whether this topic was covered when she got her license, and she said “They may have touched on it.”
Even if the instructor lightly skimmed that bit, it is still important to know. If you are in doubt, ASK.
The IRS requires used car dealers to pay income taxes on the Accrual Method on the sales of the cars. One dealer in the Southeast decided that a Buy Here Pay Here did not constitute a Sale, and decided to pay his taxes only on the amount he collected (Cash Method.)  Three returns later, the IRS realized what was going on and sent him a bill, plus interest, plus penalties. They told him he could not get a break on the penalties or interest because he either should have known he was wrong, or failed to get qualified advice that would have shown him he was wrong. In other words, No Excuses.

The dealer was furious, but had only himself to blame. He was one of those who felt that he did not “need” a CPA.

These people ignored the dangers, and wandered off into the swamp without protection or the information needed. When someone tried to hand them information, they batted it away  like a nuisance insect.

Most responsible CPA’s would have welcomed seeing a state document that explained the tax question, and spelled it out.

Stop ignoring the warning signs. Start reading the rules, and follow them. You’ll only have more profits in the long run, and who doesn’t want that?

Thanks as always for the visit.

BTW: I’ve been asked if I take suggestions for topics. Yes. Send them in. I’d also appreciate any feedback on the blog.


So, who are YOU? What’s your deal? What do you have to offer?

Those are the questions almost every customer wants to ask, but rarely does. See, many of them don’t consciously think about needing those answers, but the lack of answers leaves a hole in their confidence level of you as a dealership.

We’ve touched on this idea before, briefly, back on this topic. Now let’s dig a little deeper.

Most experienced sales professionals work the information into the presentation. As they “sell” the car, they also manage to “sell” the dealership. It is important to do so, because each customer needs to have two questions answered:

1. Why should I buy this car?
2. Why should I buy it from this dealership?

Unless you happen to have a specific one-of-a-kind unit, the customer has lots of places and similar vehicles to choose from in their search. The internet and smart phones made that search not only a lot easier, it also puts it into the palm of their hands.

So, you need to set yourself apart. How? By promoting those things that you do well.

Do you offer service?
Do you offer quality cars?
Do you offer better financing than most of the other dealers?
Do you offer better care after the sale? — More on this topic HERE.
How stable is your dealership?
This bit is important. People want to be assured you are not a here-today-gone-tomorrow business.

Confidence in the sale sells cars. Part of that confidence rests in the seller.

This is part of sales training.  Your sales staff needs to be aware of who you are. They need to believe in the owner, and buy into the process. That’s hard to develop in sales people if you do not own it.

We covered once the idea that your sales staff should be part of the dealership, and not feel like outsiders themselves. I’ll be honest, commission incentive aside, if your salesperson would not refer a friend to the lot, then they are going to have a very hard time convincing any other customer to buy from you.

I get it, having sold cars myself, the pay is the primary driver for most salespeople. Employment longevity in this industry is a rare thing, but there are those out there. What those sales people have in common is an honest belief that they are selling good cars for a good dealer.  You can not, and will not, ever buy that kind of loyalty. It must be earned. This is something that is built over time. It cannot be created out of thin air.

If you are a new dealer, then what you have to sell the employees on first is your commitment to them. Good cars to sell at good pay, good benefits (when you can,) and good conditions to work in.

I personally believe that the days of the “hired gun” are about gone. These are the kinds of sales people that float from one dealer to the next. They can sell a lot of cars to a lot of people, but too often, their games, lies, and cons run out. You may have enjoyed some short term profits, but the long term leaves you with complaints and a bad reputation.

This concept does not end when the ink dries. Customer Relationship Management teaches that customers who buy durable goods must be appreciated not only at the time of sale, but after the sale, as well.

If you look at the FTC Buyers Guide for used cars, there is a place on the back marked “See For Complaints.” This must be the name of someone at the dealership who is authorized ot hear and process complaints about the used car after the sale. I met a dealer once who hated putting a name there, because his position was that “As-Is Means NO COMPLAINTS.”  I went to another dealership once that kept copies of the signed “As-Is” Buyer’s Guides in a desk drawer close to the door. He explained that was so that they could pull them out and show anyone complaining about a car to remind them they weren’t entitled to complain. As I stood at this dealership, a lady who had bought a car just days before, came in asking for help because the water pump literally came apart in the middle of the road. They promptly pulled out her As-Is, shoved it in her face, and the sales manager laughed as her told her she was, and I quote, “Sh*t out of luck.”

Long story short, neither of these dealers lasted long.  Frustrating thing to me is, that it’s dealers like this who complain the loudest about a lack of customer loyalty, that customers won’t pay their notes, and the lack of profits in this business.

Thanks for visiting. Next time, we are going to revisit the Snake House. Put your boots on, and get ready!

Desert Ships

Has anyone seen this picture or one like it?

Some people see a boat in the desert, and think of how eerie it looks, or how out-of-place it is. When I see it, I think to myself: I’ve seen that car dealer before.

The whole point to this is to get you to think about what you have and what your market is.

Inventory Management is a concept that I see very little of at times. Dealers need to start spending a little more time looking at what they have, and ask themselves one question of each and every unit on the lot: “Can I sell this unit at a profit?”

Look first at how long you have had it. This is called Aging. The industry suggests that, except for a few very limited circumstances, a 45 day old unit is a management failure.

Is this unit still here because you have it priced too high? Or is it there because your sales staff *can’t* sell it? In the first case, look at your competition, and similar cars in the area. In the second case, you either have a training issue, or, you have what’s pictured above.

One more possibility to the “can’t sell it” case: They cant sell it because it is NOT saleable. What does that mean?  Simply this: potential buyers walked away from it because of some real or perceived defect.  Stuff as simple as lingering odors, mismatched wheel covers, busted taillights, or even a drive-ability issue. Have one of your staff go drive the thing, and see what puts them off about it. Then, either get rid of the car or fix it.

I was at a used car lot a few months ago looking at a $10,000 used van. When I looked at the back, I saw a busted tail light lens cover. I asked the dealer if he had noticed it. He said yes, and had even called the local scrap yard to inquire about getting a replacement. Told me it would only cost $25, and he would give me the number of the guy he called.  I was speechless for a moment. I finally asked him why he did not spend $25 to make a $10,000 unit saleable? He looked me right in the face, and said the tail light was NOT his problem.

I did not buy the van. Because: As I looked at the ignored inexpensive cosmetic (and safety)  issue with this unit, I wondered what else has been ignored or noticed and declared insignificant, and it gave me pause. If something as simple as a $25 tail light cover was “not his problem,”  then what else was also deemed to beneath his level of concern for me as a consumer? And that, dear readers, is a chance I decided not to take. You’ve heard before the old refrain,

For want of a nail the shoe was lost. For want of a shoe the horse was lost. For want of a horse the rider was lost. For want of a rider the message was lost. For want of a message the battle was lost. For want of a battle the kingdom was lost. And all for the want of a horseshoe nail.

This dealer could have spent a mere $25 on a tail light cover, and I might have drove home in that van. How many other customers has he lost due to his miserly outlook on reconditioning? I wondered if losing the gross on a $10,000 van was his problem? Maybe not.

I will admit, when I sold cars, it always confused me the tiny things that made people walk away from a deal. Once, a dealership I was at lost a sale of a used Lincoln Town Car over rusty ashtrays. The sales manager dug in and refused to order new ($50 for all) ashtrays to make someone happy. So the customer dug in and refused to hand that dealership $25,000. Salesman lost out on a $600 commission. Point is, to the customer otherwise willing to buy it, that car was not in a saleable condition.

I’ve seen dealers lose sales because of dirty cars. I’ve talked to one dealer closing up his lot and going bankrupt, and as I looked over his inventory, I noted (and told him) that the inventory he had was not suited to the market area he was trying to sell cars in.

Don’t let a handful of nails be the reason you turn off the lights and close up shop.

EVERY car. Go today and put your hand on EVERY car, and ask: Is this priced right? Can I sell it to the consumers in this area? If those two answers are yes, then: Is something wrong with it or do I need to retrain the sales staff? 


Question Post:

I have been approached to do some computer system and tablet reviews.

My question is, would the readers of this Blog be interested in seeing those here?

Also, is there a certain Computer System/ Laptop / Tablet / Smart Phone you want researched?

Let me know in the comments.

Also, see my new service: Excel and PDF Forms Help (Link in the the Header above )



It’s been brought up before, and it bears repeating. There is a concept called “Situational Awareness.”

Roughly, it is defined as the “ability to identify, process, and comprehend the critical elements of information about what is happening to the team with regards to the mission.” Simply put: It is knowing what is going on around you, how to deal with it, and what it means.

SA is taught and retaught and retaught in the military, with police departments, fire fighters, and many other tactical groups. It’s a concept that means life or death, not only to those groups, but also to the public they serve.

Your SA may not entirely affect on your personal lifespan, but it certainly can mean the life or death of your business.  

The title of this visit referred to snakes. In jungles or similar situations, its one of those things that requires intense SA. The snakes are usually well-hidden, due to the undergrowth or their ability to simply drop out of a tree, and are typically camouflaged fairly well. It’s also important to note that not only are they the most elusive to spot, they are among the most deadly. Each different situation has different hazards. Maybe it’s a different type of snake, maybe its some other poisonous creature, or even a human adversary who manages to hide and be as deadly as those snakes. When they train tactical forces to go into a specific area, they train them on the specific hazards in that area. In addition to identifying the threats, the unit is also trained on avoidance of them, and dealing with the ones that cannot be avoided.

So, where and what are the “snakes” in the used car business? No, that’s not a crack on your sales staff. I’m simply asking you to sit down and put some thought into what the hazards are in your area, and what is your plan to avoid them or deal with the unavoidable ones. Your “area” being the Used Car Business, coupled with the city or state in which you are based. If you engage in dealer financing, you have added hazards to identify, as well.

Some of these “snakes” are more obvious than others, just like in the forest. Some are more annoying than poisonous, and also like the wild, some are only a threat to you when you become one to them. So, when you assess the various species of snakes in the Used Car Business, you also need to assign to them a reasonable estimation of the amount of harm they can do.

This is another situation where 20 Groups are useful, in that they can assist the newer dealers with identification of the hazards, and sharing proven methods for dealing with them.

Older dealers benefit from sharing the wisdom, because stronger dealers strengthens the industry as a whole.

In the US, there were 38.3 Million used cars sold in 2015, and franchise lots only sold 11.4 million of those. (Source:

That means the independent Used Car Dealers moved nearly 27 million used cars in one year, over 2 million per month. Unless you yourself have a lot that size, remember that we depend on each other. No man is an island, and neither is a dealership.

See you next time.


I have heard that question a LOT in this industry, usually when the customer is trying to contest the terms of the deal. It’s one of the first weapons the manager pulls out of the armory to use against the customer. “You agreed to this” they say, pointing insistently at the customers’ signature. After all, the manager argues, the signature indicates legal acceptance of the terms of the deal as shown.

Almost ironically, these same dealers are quite cavalier about the other signatures on the page, namely, the dealer representative who accepts the deal.

Let’s talk about that for a moment. Who do you allow to commit your dealership to the same legal acceptance of the deal?  After all, when the dealership wants to “walk back” something they have said or change a term or condition, the customer has the same legal standing to point at the contract and say “Whose signature is this?”

Having a policy that states only certain approved individuals accept and authorize deals on behalf of the company is a very good thing, and your attorney will thank you for it.

Ask yourself: Who do you trust to legally bind the dealership to a contract?

The dealer’s signature (or that of their authorized agent) is just as legally binding as the customers’.

Your dealership needs a policy that requires all sales staff to bring a printed deal to the owner or a defined sales or finance manager for approval before the customer signs. This way, the person or persons who are being held accountable for the deals that leave the lot can review and sign off on them.

Yes, you may have already approved the customer to pay $2000 down and pay $500 per month, but is that what the paperwork actually says? Computers and people make mistakes, although it is legitimately safe to say that the latter is almost always the cause of the former’s errors.

It is simply another way to manage your dealership. I need not remind some of you that UN-managed dealerships are also overwhelmingly UN-profitable.

Think about that until our next visit.



AutoTrader released a study conducted by IHS Automotive that asked buyers to rank their satisfaction with the purchase process. Find that survey here: 2016 Car Buyer Journey.

Consumers reported spending and average of three hours buying a car, and more than half of that time is spent negotiating and completing the paperwork. We’ve talked about paperwork before, and the importance that you make sure you have the right numbers and the right forms in place before closing.

What this study highlights is that only 57% of buyers of used cars were satisfied with the closing process. That, my dear readers, is awful. Just 65% reported to be satisfied with the interaction with the finance office. BUT, four out of five people were by and large satisfied with the test drive and the interaction with the sales person. Problem is, people don’t usually highlight that part of it in their conversations with friends. The last thing they remember is that closing process, and that part being the worst part, will be remembered long after the satisfaction of the test drive fades.  

You can fix both of these. The closing process doesn’t always lend itself to an efficiency make-over, but you may need to drag it kicking and screaming.  

First, train your finance people better. Second, get rid of those negative, sour-faced, exasperated individuals who make this experience for your customers even worse. Someone just agreed to buy a car from your company, the least you could do as owner or GM is to make sure the next person they talk to is friendly, professional, respectful, and pleasant.
I have seen a lot of “Finance Managers” who used foul or abusive language, smoked in the office, treated the consumers like inconveniences, and just generally pushed the buyers around. I have seen them rudely take personal calls (or text) with someone at the desk, get up to go yell at sales staff. I have even heard this said by a “Finance Manager” to a buyer at a closing, and this is an exact quote: “Stop asking me so many damn questions and just sign the damned forms already.”  

Watch the “Finance Manager” work through a couple of deals, and ask yourself: Would YOU still sign paperwork if you got treated like that? I have heard a disturbing amount of lies come out of these offices, also, which leads us to the next point:

They need to be honest. Sadly, that does not go without saying in this industry. Consumers now have access to huge swaths of information literally in the palm of their hands. Many of them do not actually have to look at their smart phone to realize they are being lied to or that someone is taking advantage of their financial situation. They will sign the papers anyway and buy the car, especially from BHPH dealers, because they feel they have no other options. You’ve got to ask yourself: Will someone who feels trapped or cheated make payments on time? Go back and re-read the Happy Customer entry in this blog.

Make sure that the final closer (person getting the paperwork complete) knows what they are doing. This person or persons needs to be able to explain the paperwork competently. Teach them (or get someone to do this) what all the the phrases and terms mean, and how to explain it to the consumers if they ask questions. Competence and confidence in this person at this closing goes a long way toward smoothing (and speeding up) this process, and that will lead to satisfied consumers. Remember that the more satisfied the consumer is, the more likely they are to refer a friend, and say nice things about you on social media.  

In a future visit, let’s look at how we can take that four out of five sales staff satisfaction and make it nine of ten, or even better.


Be careful when advertising the prices of cars. Most dealers already know that it is a violation of federal law to represent a different Cash Price and a Finance Price.

What many more do not know is that in most every state, if you charge a Sales Fee, this fee must be included in the advertised sales price, or it cannot be charged. Disclosing it separately in the ad is not allowed. It also does not matter if you rename it to try to avoid the requirement.

You also have to be careful about finance representations. Federal law declares that if ANY one of the terms of a Finance Deal is advertised or disclosed to the consumer, that ALL terms of the Finance be disclosed. This is called using “trigger” words or terms. All terms generally means Down Payment, Amount Financed, APR, Payment Terms, and Payment Amount.
What constitutes “advertising?” Quite simply, if the consumer can see/hear/experience it, and it is designed to entice the consumer to interact with the business, it is advertising. This includes even such things as simply putting a price on the window of the car, using a sign-flipper, and any or all other traditional advertising media. Electronic ads include internet websites, postings to sales sites such as Craigslist or Ebay, and emails or faxes. The wording from the federal law is a : “commercial message in any medium that directly or indirectly promotes” a consumer transaction.
Find your state Consumer acts or laws, and read them carefully.  Remember, the Dealer is primarily responsible for the content of the ads, even if those were prepared by someone else. Also look for your state Unfair & Deceptive Trade Practices Act, if it has one. These are called Fair Business Practices Acts in some places.
The NADA published a comprehensive advertising guidebook for dealers. On the internet, search for: NADA Dealer Guide to Federal Advertising Requirements. At the time of this writing, it is available here: Press Release.

As always, remember that the Dealer is responsible for knowing and following the laws. 



I have spoken for years against Dealer Fees. They are also referred to as Doc Fees, Sales Fees, Prep Fees, Closing Fee, etc.

I’m here today to ask you to finally let it go. First, there is a bit of controversy about them. There have been multiple lawsuits filed against dealers concerning the fees, and the dealers usually lose.

First, the word “Doc Fee” is usually short for Documentary Prep Fee. One of the largest lawsuits hinged on this very wording. In most states, the only person who can charge an individual a fee to prepare a legal document is a licensed attorney. Installment Contracts and Bills of Sale are legal documents.

The second issue is that too many dealers and salespeople lie about them. I personally have been told, among other things, that it is:

  • A Federal Tax on motor vehicle sales. 
  • A fee paid to the manufacturers to register the car. (Even used cars.) 
  • A surcharge by the state or manufacturer to dealers who sell vehicles too cheap. 
  • An FBI fee for accessing the Homeland Security database.
  • A fee or tax paid to local county for processing title work.   

Once, I was told it was a bank-loan processing fee. So I asked that it be removed, since I was paying cash. The salesman quickly said he couldn’t, since “Federal Doc Fee Law” said he had to charge everyone. I asked him for a copy of the law, and he said it was “illegal” to show it to customers. 

All of these reasons are complete and utter malarkey. I do not know if the sales people made it up, or was taught to say that by the dealership. I saw through the lies, and anyone else with an internet connection can, too.

Most state consumer laws require that the dealer fee be included in the ad, either as part of the advertised price, or separately stated. Problem is, most dealers ignore this. To be fair, the states aren’t enforcing it yet. But what *can* be enforced is that if your customer has a copy of that ad, he may have a case against you for Unfair and Deceptive Trade Practices. And it wont be just one. Once any decent attorney gets that case, he or she will naturally ask if all the other customers of the dealership were also similarly misled about the pricing. 

A recent case in South Carolina over the fees went against the dealer to the tune of nearly four million dollars. In this case, originally filed in 2006, the trial judge applied a ruling in another similar case and interpreted “closing fee” to mean a “predetermined set fee for the reimbursement of closing costs, but only those actually incurred by the dealer and necessary to the closing transaction.”

Under that interpretation, the dealer had to provide evidence it calculated the cost comprising its closing fee, which it could not do. This case made it all the way to the SC Supreme court. In the SC Supreme Court’s majority opinion, Justice Donald Beatty wrote that because the dealer posted a notice that it charged a closing fee “as a means of reimbursing it for certain overhead costs, the dealer clearly communicated that that the closing fee was intended to be repayment for that which was expended.”
So, what you call this fee or how you represent this fee to the consumer could wind up costing you a lot of money. Also, look at the sheer amount of time on this case, it took nine years to finally come to a conclusion. The attorney’s fees alone would bankrupt most businesses. 
If you are going to charge a Dealer Fee, find out the average for your area, and charge that. 
Another case of note was the Florida dealer who charged a $1500 fee. He then marked his cars down $1000. The state ruled that he violated the Unfair and Deceptive Trade Practices by shifting part of the sales price to the fee, and by refusing to include the fee in the advertised price, was being deceptive.  
Keep in mind that all it takes is one angry customer with an Internet connection and the ability to find the right someone to complain to.  


The question of the day is: What is your Policy?

Policy for what? — Everything. How do we handle any given situation?

Most things are common sense, but some things need to be addressed. It could be how you handle certain transactions in your accounting, to how you pay commissions, to how you resolve complaints.

Point is, everyone needs to be on the same page. Customers define inconsistency in policy as one of the worst problems dealing with a small business. The variability of the customer experience within your own company could dwarf the differences in experience with your competitors.

For Auto Dealers, let’s start with the Sales/Doc/Dealer Fee, if you charge one. What is it for? If you are the owner, how do you want this fee explained to your customers if they ask? Whatever you come up with, inform all employees who might be in a position to answer that question. Make sure they stick to it.

How does your company handle complaints? What is the process, and does everyone know what it is? Who is authorized to handle them, and what is the limit of their ability to resolve those complaints?

Even simple things like Business Hours, Dress Code, Vacation Time, or Holidays needs to be thought out, written down, and shared with the affected people.

You should have a company policy manual that outlines all this, and give each employee a copy. Get them to read it, and sign an acknowledgement stating that they have it, and were given an opportunity to read it and ask questions.

Having known and explained policies helps employee morale, improves the customer experience, and stabilizes your business. Granted, these policies should be reviewed occasionally, and updated if necessary. If you make changes, print out copies of the changes, and get these to the employees. Date the changes. (That will be important one day.)

Now that you have that, I am going to ask the Business Owner and the Managers to do one special thing: Follow it. I ask that because I myself have worked at companies where the “policy” seemed to change depending on a manager’s mood. It’s these kinds of managers who use a varying “defined as needed” policy as a means of manipulating the employees. I’ll be honest enough to tell you that I hated working at those places. If you are that kind of manager, most of your employees hate it, too. Miserable employees = miserable customers.

You can’t keep moving the goalposts and still expect everyone to be able to reach them. 

Here’s another free idea: Sit your employees down, and ask for input. “Ivory Tower” policies can be just as bad as undefined ones. This “buy-in” gives your employees some ownership and responsibility for their jobs and how they conduct themselves.

Again, be willing to massage these policies as times change, so don’t go carving them into stone. Listen to your employees, and trust them to help you run your business. Listen to your customers, and let them help you grow that business.

Thanks for visiting!