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Join Donald Ladew in a look at the numbers behind the car manufacturers
putting out lemons. Find out why lemon laws are needed to counteract
the numbers game that is being played by the actuaries and accountants.
Lemon Vehicles - The Answer Is In The Beans
The real relationship between dealerships and manufacturers, and
their customers begins the instant dealerships and manufacturers
suspect that a consumer has a lemon. Thereafter all their actions
are directed toward making the consumer give up and go away.
This is so unbelievably callous that the average consumer can’t
believe it’s happening. There seem to be no answers to their questions.
And anyone who has experienced the endless misery and disappointment
of owning a lemon vehicle has many unanswered questions. For example:
If there is a quality problem or a known engineering defect, why
doesn’t the manufacturer just admit it and do everything possible
to correct the problem?
Why don’t they just give me another car that does what all the
fancy ads said it would do?
Why all the BS?
Why are they doing this?
These are questions from the heart. They are fair questions, which
unfortunately almost never get answered. Instead, there is a cruel,
even sociopathic aspect to the manufacturer and dealership’s response
to the consumer’s questions.
The label ‘sociopath’ generally refers to an individual who is
incapable of expressing the normal range of human emotions. Another
characteristic of the sociopathic personality is that he or she
may be an excellent actor (they pretend to care), always appearing
charming, calm and collected. If it seems like I have strayed from
the point, bear with me.
Regarding the sociopath’s charm and ‘niceness’, remember the last
time you talked with a manufacturer’s representative? What warm
and humane people they seem to be. They were helpfulness and understanding
personified, right? But did you get help? Were the defects with
your automobile, RV or boat fixed? Did the long saga of fruitless
trips to the dealership actually cause something good to happen?
Were the dozens of calls to various representatives returned? And
when they did call back, did it result in fixes for the vehicles?
I will let the reader answer these questions.
I am not suggesting that all the employees of Ford, GM, Mercedes,
BMW or any of the other manufacturers are sociopaths. Perish the
thought. However, we don’t need to be a gaggle of fruitcake psychiatrists
to know that all organizations reflect the character of their leaders.
This isn’t disputable. And it isn’t a great leap of intellect for
anyone with a higher than room temperature IQ to observe that many
manufacturers operate as though they were, indeed, sociopathic.
This behavior starts with one or more persons and spreads downward
through the organization like a foul poison.
In Shakespeare’s King Henry II, when driven to distraction by the
Archbishop of Canterbury, Thomas à Becket, Henry said in
the presence of his close advisors, “Who will rid me of this meddlesome
priest.”
Later Henry’s “senior management team” met to discuss business.
Someone might have said, “Okay guys, pay attention, Henry wants
this problem solved and he wants it now!” From that point Thomas
was toast. Soon thereafter King Henry’s pals murdered Thomas. Henry
never said, “Boys, go kill Thomas à Becket, he’s a royal
pain in the ass. Thomas certainly didn’t have the opportunity to
argue this particular distinction of moral responsibility.
There is an interesting lesson here, a parallel to modern times.
It is not difficult to extrapolate a similar set of circumstances
in today’s corporate culture where we have level after level of
arrogant, vain, amoral graduates of Wharton and Harvard who’s only
moral imperative is promotion. Quality customer care, any sense
of what the purchasers of their products experience day to day is
as remote as a star in another galaxy.
We can imagine it going something like this. The word filters down
from the top, from the CEOs of Ford, GMC, Mercedes and most of the
other manufacturers; “Who will rid me of these meddlesome owners
and their constant complaining about defective automobiles. Who
will fix my damn balance sheet?” Down through the levels of ambition,
avarice and arrogance, the character of the leader is transmuted
and translated until it reaches the bean counters, the accountants.
There the justifications of corporate cruelty and avarice are made
real. Two choices are placed on the scales of corporate profit and
loss. Here are the numbers used to justify an execution of corporate
torture you and I wouldn’t wish on our worst enemy.
Note: Various studies have found that the percentage of lemons
manufactured is between 1% and 10%. In California alone, approximately
1,500,000 vehicles are sold every year. These numbers are fairly
conservative.
If the manufacturer handled all of it’s defective vehicles fairly—such
as buying back or providing the customer with a new vehicle—this
would be 37,500 lemon vehicles X $50,000 (approximate total cost
of vehicle). This would cost the manufacturer $1,875,000,000. In
case this is too many zeros to comprehend, this is almost two billion
dollars. As Senator Everett Dirksen said, “A million here, a million
there, pretty soon you’re talking real money.”
Average total cost to the manufacturer to buy back a vehicle:
- $50,000 Manufacturer buyback cost · $25,000 Loss of value
to manufacturer due to defects and lemon labeling · $5000
Cost to manufacturer of warranty repairs before lemon disposition
· $2,500 Legal costs to manufacturer aside from attorney
fees to settle case · Approxiamte Total costs: $82,500
If we assume that 2.5% (it could be higher but doubtful that it
is lower) of all vehicles sold in California are lemons; this is
37,500 vehicles. Currently approximately 2,500 lemon law cases are
undertaken every year in California. As the bean counters might
say, “Let’s do the numbers.”
Here are the numbers for the manufacturer to settle 2,500 lemon
law cases. This would be 2,500 times $82,500. The cost to the manufacturer
is $165,000,000 million. If I can do these numbers, you can be sure
Ford, GMC and Mercedes have people who can do them far better. One
can hear the accountant’s conclusion as clear as the thump of the
guillotine falling on some pathetic Frenchman’s neck. “Well, there
it is boss. There is no profit in settling these cases.”
Accountants and actuaries at the various manufacturers know the
actual numbers very well. They know just as the bean counters at
Ford knew the Pinto was a bomb waiting to explode and still said
nothing as families were burned to death on the highways and byways
of America.
The bean counters make their calculations based on the following
concept. “If you have a group of consumers, each with a lemon vehicle,
how many have the fortitude, the aggressiveness and the know how
to go after the manufacturer and get what they are due via the lemon
law?”
The bean counters/accountants/actuaries have calculated that far
more people give up and go away—that is trade their lemon in for
a new vehicle with the attendant financial losses—than those who
fight back.
The physical and production reasons why a certain percentage of
vehicles are defective from the manufacturer are discussed in another
article. What we are looking at here is why the dealerships and
manufacturers intentionally make the resolution of the consumer’s
troubles with their vehicle so incredibly difficult. If it were
simply incompetence, that could be dealt with. Of course, technical
skill from dealership to dealership varies, but this doesn’t explain
the deliberate process of endless delay, false promises, fruitless
arbitration and betrayal of trust. Never was the Yogi Berra truism,
“It ain’t over till it’s over,” more appropriate. Perhaps he should
have said, it ain’t over even when it is over.
It should be very clear; the answers are in the “beans.” It’s in
the dollars and cents. At no point in the process is the safety,
the well-being, the endless trials of the consumer ever considered.
If ever the consumer needed a motive to dig in and fight it out,
here it is. The only way to correct the behavior at the top is to
make it financially painful to remove humanity and decency from
the equation.
Donald Ladew is a professional writer and author of numerous articles
on quality,customer service issues and many other subjects. He has
written a best-selling book for middle management. He helped write
the most up-to-date book on the lemon law, entitled: Lemon Law -
The Standard Reference Guide ISBN 0-9760058-0-8 For more information
about this subject please view: http://www.lemonattorneys.com or
http://www.normantaylor.com
For further inquiries, Mr. Ladew may be reached at: donald@normantaylor.com
Phone: 818-244-3905.
The North Carolina Lemon Law website is dedicated to bringing our
readers both information specific to the state of North Carolina
and more general information across all 50 states so that you can
make informed judgments concerning your rights and methods of achieving
retribution. The North Carolina Lemon Law website is a consumer
advocacy site that helps bring relevant information to the citizens
of North Carolina for the purpose of educating our visitors on consumer
law and consumer action.
We believe that the rights of the consumer are typically overlooked
in the favor of big business. It the belief of the North Carolina
Lemon Law website that a grassroots effort is necessary in order
to bring awareness of the plight of the consumer and change laws
to protect the consumer. The Federal Lemon Law, also called the
Magnuson-Moss Warranty Act, was put in effect in 1975 to protect
consumers and issue responsibilities to manufacturers in regards
to faulty products. This was a first step.
Since then, all 50 states have adopted some form of lemon law specific
to the automobile industry. More information may be found at the
Federal Trade Commission website in a section called "Facts
for Businesses." It is the belief of the North Carolina Lemon
Law website that the current laws governing the length of time one's
car can be out-of-commission are too lenient towards the manufacturers
and that consumer advocacy is in order. Write your state congresspersons
to let them know that you would like shorter time frames for the
North Carolina Lemon Law to kick in regarding your vehicle.
Disclaimer: The information on this website has been complied
by the North Carolina Lemon Law website from public sources. Use
of information from this website does not constitute an attorney-client
relationship. Please contact an attorney in your state or your Attorney
General to ensure that all your rights are protected.
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