Auto Club Tough on Shady Dealers
Shawn Randolph, a lawyer and prosecutor, never thought when she set out to buy a new car on a discount referral from the Automobile Club of Southern California that it would end with the Auto Club putting a dealer, Long Beach Honda, on probation.
But it turns out the Auto Club is very serious about enforcing the terms of its referral program, and about guarding its reputation with consumers.
Such referrals by membership-based organizations like the Auto Club, Costco Wholesale and similar entities are a growing segment of the auto market.
Would-be auto buyers are sent to a dealership that has stated its willingness on bid sheets to sell various models of new cars at a discount, usually just a few hundred dollars over invoice.
The customers must contact a special salesman and often the transaction is conducted behind the scenes, so that regular customers paying more won’t notice it.
Should the dealership have the car in question on sale at a lower price than the discounted price, it is obligated under state law to offer it at the lower figure.
In Randolph’s case, she wanted a Honda Accord EX Coupe V-6, which is so much in demand that many dealers won’t list it for referrals.
Randolph finally bought her car at a little over $26,000, or $1,500 over invoice. But for a less desired model, the referral program might have gotten her the car at only $200 to $400 over invoice.
The dealers pay a fee for the referrals, but neither the Auto Club nor Costco would say how much.
Jim Sinegal, CEO of Costco, said that through referrals his firm makes, 45,000 to 50,000 cars are sold each year in 27 states.
Carol Thorp, spokeswoman for the Auto Club, said the number of sales through its referral program is confidential, but runs many thousands a year in the Southland.
Randolph’s six-page complaint on her contacts with Long Beach Honda was coherent and detailed.
Dick Watson, general manager of the dealership, asserts that Randolph seemed to have a chip on her shoulder and was too quick to jump to conclusions that his personnel weren’t telling her the truth about the availability of the car she wanted.
But both the Auto Club and American Honda Motor Co. felt Randolph’s attitude was justified.
Randolph says she is certain that Watson’s employees were “deceitful and untruthful” in insisting they had a prior $1,000 deposit on the coupe she wanted to buy, and thus couldn’t sell it to her at the promised discount.
Watson insists there was a $1,000 deposit, but the other customer finally could not come up with the rest of the financing.
Randolph, with help from Greg Olivas of the Auto Club’s automotive purchasing department, obtained the coveted coupe from another dealer, Scott Robinson Honda in Torrance.
In her complaint, Randolph writes, “I had to go through a tremendous amount of anger and emotional upheaval in dealing with Long Beach Honda and pursuing various complaints against them, and I still had to wait up to two weeks just to get the car at the price that the car should have been sold to me for at the very beginning, with NO hassle.”
The Auto Club, also citing past complaints, acted quickly on Randolph’s, putting Long Beach Honda on 90 days probation.
Thorp said the Auto Club listens closely to all complaints, well written or not.
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“We have 4.5 million members, so dealers do not like to lose their relationship with us,” she said. “We have spent the last century building a high degree of trust with our members, and we can’t allow anybody to erode that.”
Thorp faxed me the letter of Oct. 12 in which the Auto Club’s David Cavano notified Watson of disciplinary steps.
“I regret to inform you that, based on several member complaints involving your dealership, we are placing your account on 90 days probation,” the letter began.
“If we receive any more justified member complaints regarding your dealership within the next 90 days, we will have no other choice than to cancel your account. . . . [We are] negatively impacted by recent actions of your retail sales department. Apparently, our members are being handled like regular retail customers without regard to our program guidelines.”
Watson said this was “the first such letter we’ve ever received from the Auto Club.” He said he knew of only two complaints, both recent, from referral customers over the years.
The American Honda Motor Co., though, took a serious view of the situation. On Dec. 8, its Western Zone office in Torrance sent a letter to Randolph, apologizing.
“We . . . will use your comments to create a better service environment at this particular dealer and at our national headquarters. . . .
“We apologize for the apparent lack of customer service and professionalism that you described in your [complaint],” said the letter signed by Paul Evleth, a customer relations analyst.
“You are correct in that you should have been able to obtain the . . . coupe with ‘no hassle.’ We want to assure you that what you experienced does not live up to the Honda philosophy of exceeding customers’ expectations.”
I raised the matter with W. James Bragg of Long Beach, whose 1993 book, “Car Buyer’s and Leaser’s Negotiating Bible,” is about to have a third edition published by Random House.
Bragg said he was surprised that Long Beach Honda ever agreed to sell the coupe under the referral program, since it is so popular a car that most Honda dealers can’t obtain nearly as many as they can sell at elevated prices.
Olivas of the Auto Club said he too had asked Watson why he was listing this car.
I asked Watson the same question but got no clear reply. Watson, however, noted that the coupe is no longer listed by his firm under its referral programs.
Ken Reich can be contacted with your accounts of true consumer adventure at (213) 237-7060, or by e-mail at ken.reich@latimes.com
