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!