"AS-IS"

We'll take care of that.

The Judge sits to decide, which is it? Was the car sold AS IS or as the salesman said, "We go over every car with a fine tooth comb, believe me if you have a problem we'll take care of that."

I meet with dealers all the time who tell me they sell all their cars "AS IS". I have seen very expensive cars, $30,000 SUV's with "AS IS" marked on the Buyers Guide. Would you advise your mother to buy that? In most cases the dealers are so concerned that they are going to have to pay to fix something they have opted for an AS IS policy on ALL their vehicles. There are dealers who just sell crap, which is why the Used Car Salesman ranks right up there with lawyers and politicians and we have a CFPB in the first place. The actions of a few reflect badly on us all.

There are many problems with the AS IS mentality, and my good friend Jim Radogna with Dealer Compliance Consultants, has outlined many of those pitfalls in his article Used Car Warranties: What You Don't Know CAN Hurt You. In his article he talks about Express Warranties and Implied Warranties. Very interesting stuff. As he says, Now I’m all for dealers protecting themselves, but unfortunately, automotive law is not that simple and “protecting yourself" can be far more challenging than just slapping an As-Is guide on the window.

Jim further states, Rarely a day goes by without a dealer somewhere receiving a letter or lawsuit regarding an alleged breach of warranty.

The federal Magnuson-Moss Warranty Act, the Uniform Commercial Code (UCC) and various state laws (including used car Lemon Laws) all govern warranties on motor vehicles. Breach of warranty claims are extremely common and can lead to serious legal consequences for a dealer.

If you want to keep the CFPB, the FTC and other government agencies out of your business, I suggest you listen.

I hope that each of you belong to a 20 group. As Iron sharpens Iron so does one man sharpen another. If you are a member of a 20 group and have at sometime sold all your cars AS IS then you have already been chastised by your moderator and fellow 20 group members. There is a reason this is a bad idea.

First off, when you sell all your cars AS IS you give the appearance to the CFPB of selling crappy cars that you are unwilling to stand behind, to take advantage of some poor unsuspecting consumer, whether true or not.

Second, if you are in the Buy Here Pay Here business. Payments are the Life Blood of Buy Here Pay Here. What do you think is going to happen the minute the car breaks down and the customer can't afford to fix it? You don't have to be a car business expert to figure that one out.

Maybe you like lots of repos and side notes. The CFPB is going to love you.

The point is if you are going to be a successful dealer, and you want to stay out of trouble in today's and tomorrow's market, you better take good care of your customers by taking good care of their car. There is a way to do that without costing you profit, or at the expense of your cash flow.

I have been in business now for nearly 20 years. The car business for nearly 30. What a great business. It is one of the last great business' in this country that personifies the age old Buy/Sell, Give and Take, Barter and Negotiate sales process. A business where no matter your back ground, with enough personal drive and dedication you can make a great living selling cars. So, if I may give some advice to you younger dealers who want to make this business part of your life; ALWAYS DO THE RIGHT THING. Things like providing a warranty on your cars, because standing behind the sale is the right thing to do.

The problem with warranties comes down to $$$$ and commonsense.

1. You can give your customer a warranty, like a 30 day or 1000 mile 50/50. If it falls in half the customer gets both pieces. Please!

2. You can fix problems as they arise, and Murphy's law dictates that the largest number of problems will occur on your slowest month. An UNKNOWN, REOCCURING EXPENSE. Your favorite business planning type strategy, UNKNOWN.

3. You can buy a Vehicle Service Contract (VSC) from a third party. Give it to every customer. $600 warranty X 20 = $12,000. Wow. Not to mention, "Who has claims control"?? $144,000 per year and NO control? So, you put out all this money, it's not covered and the customer quits making their payment. Sound business strategy?

These are the common approaches to this major problem. So, the simple solution many dealers have adopted is EVERYTHING IS AS IS. And now we are back where we started.

Let me direct you to a little sanity. Ownership, Control, Profit.

Simple, Safe, Secure, DEALER OWNED REINSURANCE COMPANY!

Tim Byrd is Founder and President of Tim Byrd & Associates, Inc., DealerRE, a national company is a managing agency located in Gloucester, Virginia. An Auto Industry Expert on Dealer-Owned Reinsurance Companies, BHPH Operations and F&I Development. A 25+ year veteran of the car business, Tim is a trusted advisor to many car dealers. Tim is married and has 5 beautiful children. Tim has been featured many times in The Virginia Independent News, Special Finance Insider, Around the Commonwealth, DealerELITE.net and the Dealer Business Journal. Tim is a sought after speaker and co-author of the #1 Best Selling book "Unfair Advantage".