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Kicking Us When We’re Down

August 2009, F&I and Showroom - Feature

by Gregory Arroyo - Also by this author

I have to admit, I’ve been feeling a little down of late. No, there’s nothing wrong with me, my family or my car, although Cash for Clunkers could be in its future. What’s been bothering me is how this industry continues to be kicked when it’s down.

Take “Car Dealer Tricks to Watch For,” a Car & Driver article that popped up on Yahoo! in June. I’m not one to bash another publication’s story, but come on! I kind of understand the timing. Between the Cash for Clunkers program and the record amounts of money manufacturers are throwing on the hoods of vehicles these days — a record $2,930 in June — and it’s clear the industry is doing all it can to get consumers into showrooms. But that’s as far as I’ll go in understanding the timing of this article.

Does it make for good reading? Sure. But so has every other dealer exposé published throughout the years. Heck, a search on Yahoo! for “Car Dealer Tricks” brings up 9.72 million possible matches, including a 2007 feature from, aptly titled “Dealers Are At It Again.”

Even worse, many of the “tricks” C&D supposedly uncovers, such as check ransoming and altered bills of sales, appear in many of those older articles. But I have to give it to C&D, it kicked off its exposé with a tactic that’s straight out of the ’80s: the four-square worksheet. Unfortunately, they’re not the only ones to write about it. In fact, a Yahoo! search for “four square” produces more than 900,000 potential matches.

This isn’t the first time during my more than three-year tenure here at the magazine that an article like C&D’s has been published. Last fall, I interviewed Edmunds’ Philip Reed about his “Confessions of an Auto Finance Manager.” He admitted to me then that his intro to the article bordered on sensationalism. But I’ll give it to Reed, that article came at a time where it seemed like dealers were being nabbed on a daily basis for some kind of wrongdoing. I can’t say that about C&D’s article.

That’s why I was amazed that C&D would start its article with the four-square worksheet. Rather than educate, all it did was demonstrate it’s failure to understand that dealers no longer dictate down payment or monthly payments; the lender does. And that’s the story that needs to be told.

Now, don’t get me wrong, there’s some really good advice in the C&D article, such as negotiating the manufacturers suggested retail price without incentives or trade-in. And the magazine’s bit on negotiating payment was right on. But what’s missing is the reason we, as a nation, are in this economic mess: Consumers just didn’t know any better.

And the thing about it is the credit industry spends millions every year on programs aimed at educating consumers about managing credit, but it seems like much of that information has fallen on deaf ears. So, if none of that has done much to teach consumers about credit, why not use a different tactic? Why not inform consumers of the challenges dealers are facing in getting them financed, and instruct them on how to make themselves more attractive to the lender?

While we’re at it, why not tell them that a mid- to high-700 score isn’t viewed as it once was, but stress that financing is still available for consumers in that tier? See, we need to reeducate consumers. We need to manage their expectations, and teach them that what happened earlier this decade is not how credit works.

Instead, here we are with another article on how bad dealers are. I don’t disagree that we’ve made our own bed, but this is a different time. The industry is facing consumer-protection bills that could push out all credit-challenged consumers. The latest threat is the proposed Consumer Financial Protection Agency, which the American Financial Services Association’s Chris Stinebert testified against before the House Committee on Financial Services at a July hearing.

Forgive me, Jared Gall (he authored C&D’s article). I don’t mean to beat on a fellow journalist. However, your blanket statement that consumers should avoid anything an F&I manager offers just really set me off. I won’t debate the products you disparaged, although I can get more than a few F&I pros to explain the value of good paint protection and fabric guard.

What I will tell you is that with consumers holding on to their vehicles longer and with job losses for the first half of the year outpacing any other half-year period since World War II, the need for products that protect a customer’s investment has never been more important. Bottom line, consumers do need a good F&I manager to navigate these rough waters.

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