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But seriously, one of the biggest problems a salesman has to overcome, is the "bad" credit problems that raises it head about 1-2hrs down the road with the customers, most will defiantly deny it and their false pride will make them shop another store .....
The three worst credit catorgories:
Doctors .. Attorneys .. Ministers.
Terry.
1. lawyers 2. strippers (lots of cash, though ;-) 3. food service
Customer makes appointment and appears on the lot on time at the very beginning of the weekend with a specific '04 SUV vehicle in mind that is sitting on your lot, after initiating internet sell through you 2 weeks ago and having you offer invoice price because another dealer had, too. Customer is driving a 3 yr old vehicle exactly like the one on the lot, and intends to replace it that day if possible because you have desired color and options. Since customer is a current owner and also has already test driven new model at other dealer, customer would like to just make OTD offer, indicate an acceptable finance rate/term through the dealer's finance arm, and if sales manager can agree YES/NO on the deal, while the papers are prepared, customer will then drive the vehicle to check it out.
The customer has prepared, knowing all incentives and most sources of dealer profit (that can be known):). The offer presented is (best guess) $300 lower than invoice, and (to tell or not at this point) customer will not accept anything in the back end (warranty, mop-n-glow, service contract, etc.) Customer has learned in 2 weeks of recon that local dealership "fees and doc" range from $600-$900, thus some margin here.
Customer is very non-threatening, yet firmly professional in demeanor by nature, and has no qualms about leaving dealership in a friendly manner to "wait out" purchase a few weeks more if no deal made that day.
Customer wants it "done and offer" since no selling is needed at this point, just the finance paperwork. Any advice to help things go as planned and keep all involved at the dealer "happy."
Actually, ABC motors no longer has the same vehicle...it sold last week, but you and 2 other dealers do, so you are just #2 in line for my business at this point. And, because I don't want to sound anything but cooperative, I did not tell you that one other dealer has already said $200 below invoice, but I would have to travel 20 miles to get this deal. That's how I "decided" I might pursue $300 below invoice. I live in city where there are 9 dealers for this make/model. Normal commute to work and back is 28 miles, so going 20 miles for a large purchase is not a negative for me...just an issue of convenience on this particular day.
It's the bobst method in reverse. What do you need all the brain damage and the race to the bottom for? Can't hardly blame the customer for playing these games if it saves him actual money when he does.
But I'm not in the business, what do I know...
-Mathias
I really am trying to learn here.
I would not be going straight for the low deal(?) if the 3 offers I've had in the past 2 weeks hadn't come back to me with counters of their own offers...I've yet to make an offer.
1. dont give you a price, and ensure that you will at least call me back before you buy.
2. give you a price and all but assure that i will never see or hear from you again.
these are not based on you, personally. they are based on history and odds from my own experience.
to me, i could care less whether you buy for $300 over invoice or under. my commission stays the same up to around $800 over, so you are not appealing to my wallet here.
my store rarely drops below invoice. last year, for instance, there was a $500/car incentive on sentras if we sold x number of them. we hit x number around the 20th, so we did a couple deals below invoice that month.
but if its only holdback left, we absolutely dont go below invoice. therefore, i know from get-go that you cant get it.
the problem is this...if i simply say "no, you cant have it for that.", then option #2 above applies every time.
However, they might still try to cheat you. When we bought our Honda in 1999, I specified in the written offer that we wanted two additional keys. They agreed, but just before we were ready to write the check they mentioned the keys would only work in the doors, which meant the computer chip in the keys would not be set correctly. That is, the keys could not be used to start the car.
Of course, we immediately got up to leave, so they quickly reversed their position and gave us the correct keys.
The car sales people are a lot more experienced than we are, so we have to be careful at all times.
Thanks. And bobst -- I read back on your posts and appreciate the view from your side of the desk.
dealers will respond differently to a request for holdback...
1. they simply say 'no'.
2. they laugh
3. they stop negotiations and bid you adieu
4. #3 plus a swift kick out the door.
all in all, you can ask, but do so knowing its normally not a negotiable amount.
buying at invoice often relies on there being some holdback left. if you are on a 120 day old unit, the holdback is pretty much gone, and invoice becomes the dealers true cost.
The main thing is to BUY THE EXACT CAR THAT WILL MAKE YOU HAPPY.
As long as you are sure you are buying the right car, then enjoy the car-buying experience. You can't be aure your offer has been refused until you walk out of the dealer and drive away.
Last October they did not accept our offer, but when we were walking to our car they came out to the parking lot to say they would accept it. A beautiful red 2003 Acura RSX, much nicer than the tomato red color used on the 2004 models.
So if it's gone in 120 days then that must mean that you are paying annual inventory rates of just over 9 percent (365/120 * 3 percent holdback = 9.125)
That seems a bit high of a rate.
I suspect that the true rate that is being assessed is closer to 5 or 6 percent. At 5 percent interest I calculate that the holdback breakeven point is 219 days.
please enlighten me if I'm way off here.
http://www.edmunds.com/advice/incentives/holdback/index.html
The 3 percent holdback is the most often occurring rate.
Particularly since holdback is NOT a profit item. I don't really want to dredge up the whole what is holdback/why can't I have it/the mean dealer's screwing me conversation, but IMVHO, the fact that you are even allowing holdback to enter your mind and affect your offer, you're missing the point. Holdback is simply manufacturer support given to the dealer to cover the financing costs borne by the dealer while the car is sitting on the lot.
Now, of course, if the car sells the day he gets it, the dealer makes some money and is very lucky. If he sells the car the day after holdback runs out, he's exceptionally screwed, since not only is any holdback money gone, but he also has nothing to subsidize the financing costs he incurs by having $25000 sitting out there for 90 or 120 days.
In my view, the dealer couldn't care less about what a customer thinks holdback is or what is there or whatever. One could argue he would be willing to sell the car quick early in holdback because he can still make money or he won't budge at all, since he figures he can wait until someone comes along that will pay the price he wants. One could also argue that he will be desperate to move the car after it's out of holdback so he doesn't incur any more costs or that after holdback is gone, he will refuse to go less than invoice since he's already incurring financing costs, he's certainly not going to make it worse by selling the vehicle at a loss. My point is it's all irrelevant because there are innumerable variables at work here (volume bonuses, quotas, holdback, whatever on and on) that the absolute best thing to do is offer what you WANT TO PAY and see how they respond. Period. That will tell you if you are too low. Don't worry about "paying too much". There's no such thing, because you offered what you are happy to pay for that vehicle.
For instance, some may be happy to offer MSRP for a 300C (I would now, if I had the money). Some are only happy to offer invoice (and they won't leave with a done deal). The point is, the guy offering sticker didn't "pay too much" because he got the car he wanted at a price he was willing to pay. I really, really think people put too much time and effort into mass crunching of numbers, the only result of which might be a $200 savings here or a $300 savings there and then when all is said and done, they don't even like the car 3 months later. Work hard on finding the car you like and want, then figure out what you're willing to pay to get it. Not "what is the right price?"
That one that showed a profit goes to offset the 6 that went over 90 days and cost money, so the dealer is still in the hole to the tune of 5 cars worth of financing!
I never use "dealer cost" or "holdback" to negotiate.. it just isn't relative to what they might sell the car for that day... but, it sure doesn't hurt to know about it.
regards,
kyfdx
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Doctors .. Attorneys .. Ministers."
love it... I thought Accountants would make that list! :-)
Although I see where you're coming from. Recently at my company we had a seminar with a Financial Consultant for the Accounting department. About 80% of them admitted to carrying balances on their credit cards!
At Infiniti it is just 1%. Audi, BMW, Jaguar and Scion have no hold back at all. The percentage holdback on all brands is on Edmunds at http://www.edmunds.com/advice/incentives/holdback/
In the last 4 months I've paid off my mortgage, both car loans, all my credit cards (and closed 4 of the 9 I had) and added tens of thousands to my liquid assets. The end result? My score has gone down by 60 points! It's a funny old world
Did you win the lottery? Rob a bank? Inherit $$$'s from a long lost aunt or uncle?
But, yeah, your point is well taken ... not having any debt may actually be detrimental to your FICO score.
Didn't I post nearly the exact same thing (ie. Post # 9608) ???
I guess two people can look at the exact same data and come out with opposite conclusions.
My point was, was that 120 days of holdback seemed short. Tell me what exact make were talking about and well hammer it down. For domestic cars the holdback tends to be bigger but you can look at the chart and draw your own conclusions.
I am too! ... debt is not a bad thing if its "used" wisely, such as a low-rate car loan, etc...
...."In the last 4 months I've paid off my mortgage, both car loans, all my credit cards (and closed 4 of the 9 I had) and added tens of thousands to my liquid assets."
no joke... win the lottery?
Basically, income fom a property sale and an insurance payout that I finally got after 8 years. Anyway, now back to re-building my credit!
When I was down in Nashville...we used Black book. They all laughed at me with my Galves books. haha. I was shocked how much more value the used cars had in that market. Especially older high mile cars. Cars that would be valued at $1.00 in Connectiut are worth $500-700 in Nashville.
Down there the dealerships were bigger but much farther apart... Here in Connecticut, you can visit 5 Ford dealers within 20 minutes of each other..creating much more competition.
think of the books as diving or gymnastics scoring guides. you get a "possible" start value, and flaws are deducted accordingly.
This is their advice:
"You can start the bidding process after you've decided on the make, model, and style of car you want (Ford Taurus, 4-door sedan GL, for example). You don't have to know the exact options you want.
Get each dealer to bid an amount above or below the "factory invoice price." The factory invoice price is the same for all dealers. So if one dealer bids $500 above invoice and a second bids $500 below invoice, you'll know the second is $1,000 lower priced than the first. The "Money-Saving Help" list at the bottom of this article tells you how you can get information on factory invoice prices.
But you don't really have to have the invoice price information in advance; just explain to each dealer that you will expect to be shown the actual factory invoice for any car you consider buying.
Get bids from at least five dealers. Talk only to a sales manager or fleet manager. Here's the basic approach:
"I'm in the market for a (make/model/style) and I've made a list of dealers to call-including one that's out of the local area. I've done some homework, and I know the approximate invoice cost of the car. What I'm doing now is calling each dealer on my list to find out what each wants as a markup or markdown from factory invoice cost. I would expect to be able to take my pick of any car on your lot of the make, model, and style I'm looking for at the markup or markdown you quote. So that everyone is on a level playing field, I'm calling each dealer only once, and I'm not saying what any other dealer is bidding. I assume you will let me see a copy of the invoice for any car I pick out to buy. Before we talk about your markup or markdown from invoice, tell me are there any charges that you will expect me to pay for advertising, document preparation, or other services even though they are not listed on the factory invoice? Also, are there any dealer add-ons, like rustproofing, pinstripes, or wheel locks, that I'll be required to pay for?"
You may want some options that aren't factory options. For example, some manufacturers don't offer a radio or air conditioning as a factory-installed option on some basic styles. If you are interested in such dealer-installed options on these cars, you'll need to find out each dealer's charge to provide them. Then ask:
"Is there a factory-to-customer rebate in effect on this car? Please don't take any customer rebate into account in your bid; I assume I'll get the rebate separately as a further discount.
"Okay, I think that's all I needed to go over. Now, would you like to give me a commitment as to exactly how much markup or markdown you'll accept above or below all these costs we've just discussed?...
"What if I don't see the car I want on your lot but I still want to buy my car from you? Will you exchange cars with another dealer in order to get me the car I want? Will you still honor the bid you just gave me if you have to get the car from another dealer? If not, how will you figure the additional charge for this dealer exchange? What if I want to factory-order a car? How will that affect your price commitment?"
You can go through this process with each dealership. Don't be intimidated. If you don't understand something or if answers seem fuzzy, ask again. You will almost certainly save hundreds of dollars-many buyers will save thousands of dollars-by following this process."
some dealers do show their invoice, but i don't understand why they feel it's a "right" of the customer to see it.
some customers are misled and end up expecting more than they are entitled to.
..."Talk only to a sales manager or fleet manager.."
I don't know about other managers, but if somebody is going to insist on a manager to sell them a car...I expect that manager to get a higher gross profit than a salesperson. Fleet managers sell fleets...why should they take time from their real job to deal with a single retail sale when they are working on selling fleets of cars?
..."You can start the bidding process after you've decided on the make, model, and style of car you want (Ford Taurus, 4-door sedan GL, for example). You don't have to know the exact options you want."...
Most dealers are not going to 'bid' for a one car possible sale..Of course the more dealers who pass on your bid the less chance your going to get a good price...you buy a fleet of cars and everyone will bid for your sale.
I understand that buying a car can be a scary thing...but it can be alot easier than the information you posted....spend some time reading the posts on edmunds and you will see that if you do your homework...understand how things work, be realistic, value your time and the time of the salesperson, be honest and get a dealership referral. This will get you better deals overall.
What are you looking to buy?
The time that they don't go by the "book" is when they KNOW they are going to send the car to an auction or other Used Car Dealer. Then they might call them up and ask how much they will buy it for.
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Isn't that the job? Knowing the market for all those "hundreds of models"? Or at least the few dozen that show regularly?
It's a very difficult job to be sure, but still... Let's see what a certain gentlemen with a lot of experience had to say on this a few thousand posts back:
***...... I have no idea where they compile their info .. on "any" given day It can Nada, KBB, BB, FBI, CIA, MIA, UAW, MSU, that has the most accurate figures ..
I check em' all the time and sometimes I wonder who/what/where the *^#% they get that info .. the funny part is, it's not just the consumers it's also the dealers .. take a dealer, UCMgr, etc and take him outside of the nice office suit and tie, drop them in front of 3,000 vehicles and Bang, they get the "dead mullet look" and will pay stupid money for most vehicles .... like I always say, you can always tell the difference between a dealer that "thinks" he knows what a vehicle is worth and one that "knows" what a vehicle is worth .. the one that knows, doesn't have a Zillion paper cuts on their fingers .l.o.l...***
I would guess it's almost self-defense to "look at" -- not "use" -- whatever book the other guys in your market are using.
In the end, you gots to know, and only experience will tell you when to step up and put that 2000 V6 Solara with 20k on your lot for "above book" -- it WILL sell -- and when to pass on the "cheap" 2001 Isuzu Trooper, super duper clean, great color, but just no buyers for it in your market...
Terry talks about it all the time, trading a domestic at the Audi store ("We don't need no stinkin' 96 Impalas") or vice versa ("75k on your 01 Civic EX? Can't give you more than $3k, but enjoy your new Aztec").
I would think that the UC Mgr's performance has a bigger effect on the bottom line than any other person at the store.
Steiner's Law of Getting Older: "Experience only counts if you're paying attention"
-Mathias
By the way, how's the Vibe running? Thinking about going in that direction myself.
Even the 10 Commandments were chiseled on stone.
and the trade-in is only one part of the deal...
you may give me book for the trade (book may be over-valued by $2,000), but I "guarantee" its an over-allowance allowed by the price on the new car. And I think we've heard this before... "the only difference that makes a difference is the difference." Its the whole deal....
Regards.
Quite frankly, Rich, it looks like all the posts are in order (and thus, none were deleted) and I did not see anything close to butchbr calling anyone an idiot.
You have to admit, that here, on RWTIV, inconsiderate buyers, etc., we hear nothing (NOTHING) more than either "the books are just a guide" all the way to "they are completely useless and wrong". It's not an unfair or unreasonable assumption that an experienced UCM knows what he will accept for just about any vehicle once he's evaluated its condition, mileage, etc. (The exception probably being, as others pointed out, a domestic dealer taking a Mercedes or Lexus in or a Lexus dealer taking in a Chevy Impala--in those cases, neither probably know enough about the market for those trades than to call the local dealer that takes such models to see if they will buy it).
I prefer bowke's explanation as it give the UCM a start value--somewhere to start--it's his/her experience in evaluating cars that ultimately lets them determine the value.
Whenever I go to the auction there are apx 2000-4000 used car buyers and sellers...everyone of them has a pocket full of books....It certainly isnt an exact science but a guide or basis to start things rolling. Sometimes people take my posts a little to literally