actually a few... Who makes the final decision on the selling price of the new vehicle? Desk Manager/Salesperson, etc. On that same note, who decides what the trade is worth? Just a curiosity... Wondering if there are actually "whippings" that go on in that office or not.. =o)
Is there such a thing as a "one time only" offer? I have heard it many times, but honestly believe that if the offer is made once, it will be "sorta" easily achievable later especially since most of the dealers I have dealt w/ recently keep files on their customers.
If you car dealers out there don't want to answer, no problem, just curious especially on question number 1. I have found a bunch of great information on this forum, and figured that it can't hurt to ask.
If a customer is buying a car that sells at MSRP and is a hot seller will this have any effect on how the trade is evaluated for value?
I can see this scenario happening:
Customer goes to buy 2003 Blahmobile. Dealer is having a hard time keeping them on the lot. If the dealer sells the Blahmobile at MSRP he makes $3000. Customer has a 2000 Blahmobile he wants to trade in. Now dealer knows he can sell the 2003 Blahmobile to the next guy in line. Might he undervalue the trade of the 2000 Blahmobile by say $500-$1000 to make even more money when he resells it? Or does the dealer say to himself, I am making the max profit on the 2003 Blahmobile so I will give the most I can for the trade.
bret- "Is that really a "general rule"? I don't think so. A trade is worth what it is worth."
Well if that is so, then why are there so many different values for used cars (wholesale, retail, trading to a dealer, selling to an individual, buying from a delaer, buying from an individual, it makes my head swim). I totally agree with you, a trade is worth what it is worth. If it is worth $10,000, that is the value whether I trade it to you, sell it to my neighbor, buy it from you, or buy it from my neighbor.
What I meant by my statement that you commented on was that I have read dealers post here about what they call the different types of buyers. One of the types they mention is a trade in buyer. According to them, this buyer is mainly concerned with the value the dealer places on his trade and not the cost of the new car. So the dealer may offer $2000 above the true value of this buyer's trade in to make them happy, but he increases the cost of the new car $2000 above his lowest selling price to compensate. This keeps the gross profit the same as if he offered a lower value for the trade but also sold the new car for less.
I may not be using these terms right, but I see it this way. The buyer with a trade is trying to pay invoice for the new car and get retail for his trade (low end of new car price, high end of trade value). The dealer is trying to get MSRP for the new car and offer wholsale for the trade ( high end of new car price and low end of trade value, this maximizes his profit on the two cars). Most car deals fall somewhere in between these two extremes with both parties negotiating the cost of the new car and the trade value.
But this gets skewed when the new car in question is a hot seller ( I am sure the same holds true in the opposite direction if the new car is a dog). Basically the dealer holds all the cards in this special situation because he has what a lot of people want and are willing to pay MSRP for. I was just wanting to know how or if this effected how the dealer evaluates the buyers trade. It would make sense to me that they may undervalue trades (to maximize profits), because if you do not buy the new car, the next person on the waiting list will.
unless it's a very small store where an older salesman (with a good realtionship with the owner), there is a desk manager who has total authority. The salesman usually has no authority over pricing. The salesman really wants to sell a vehicle and will drop his pants to get it done and that's what the manager is there for - to keep the store afloat.
Your trade is evaluated by the same manager, usually, unless it's a larger store that has a used car manager.
I've always used "one time" deals because I know that if I don't take you out of the market today, you'll likely (per National avg) buy within 48 hours and I won't have another chance for 4 years.
I think it varies by store. I work my own deals and rarely do I have to go to the manager(S) to get approval for a deal. OTOH, there are some salespeople here that still don't have a concept of over allowance or under allowance or what the margins are between invoice and MSRP. Some salespersons are told by the desk to do the "today only" routine to put a sense of urgency on the customer. I will end a negotiating session with the price I will sell the vehicle for and if the customer asks if the price will still be good tomorrow I tell them yes. Most of them will come back if they know a good deal when they see one. With "trade" buyers, you have to educate the customer on the ACV (actual cash value) of their trade and we may over allow to make the deal if it's a clean car that we want for our used car lot. If it's something that will sit on the lot and not sell for 3 to 4 months we will try to convince the customer not to trade or to sell the car themselves. For example: I sold a Highlander 2wd Limited last week for $1800.00 over invoice, which was about $100.00 less the TMV. The customer had only been to another Toyota store and they ticked him off. He had a 96 Buick Park Avenue, very clean with 36k miles on it. He wanted no less than 8k for it. Although the car was very clean we only offered 5k for it. The other store had offered the same but were not discounting the Highlander a bit. He came by a couple of times and when we finally did the deal he pulled the trade out, we offered $500.00 more for the trade but he still wouldn't let it go for that. He said "Looks like no one wants my car. Is something wrong with it?" he asked. "No Sir, it's a very nice car. But the reality is that's what it's worth to us. You'd be better off selling it yourself." Mackabee
I got the "you'd be better off selling it yourself" speech last year on my trade in. It was a '93 Nissan NX2000 with 80k miles. Dealer didn't want the car and offered me $1000 for it. I wasn't too pleased with that, so I sold it myself for $3200. It was well worth the few hours of effort, IMO.
Most dealers don't retail a vehicle over 3-4 years old, no matter how nice it is. When you get into lending terms, especially where loan length is involved, it's tough to get more than a 24-36 month loan on a vehicle older than a few years.
Besides, if you an make out way ahead (figuring sales tax offsets) by selling on your own, you're money ahead.
What area of country you in? $1800 over on a 2wd ltd highlander? Last spring I had two dealers in the SE offering $400 over. Why so much more in your area? thanks for the info
No one has yet to answer my question: do dealers under allow on trades when a hot selling new car is involved in the deal?
Alright guy's and Gal's. I ended my career as a Car Salesman yesterday. I guess it just wasn't in my blood. I have a new found respect for you guy's that can do it and be succesful. Never again will I "Stroke" a salesman just to take a nice car for a test drive. I have learned how much of a Time waister that can be! My hat goes off to all of you Sales Reps. It is a tough way to make a living. In my three month's of selling cars I became almost like family with my colleaugues. Geez we spent 60 hours a week together! Oh well back to my work boots. I am sure my working in this field will stop me from being written about in the "Inconsiderate Buyers" collum!
Let's say you are selling your own car. You can sell to a) some guy that plans to drive it for the next 5 years or, you can sell it to b) a business that is only interested in re-selling it as fast as possible to a guy like a).
Surely you can see that these two parties will put a different value on the same car.
You got exactly what I was saying. I was trying to see if the inverse was true or not. If I want to buy a car from you at MSRP, do you offer me the highest you can for my trade?
landru- yes I can see that difference, it is just confusing. Used cars are a complicated animal.
Heck no, I would still underallow. There are two negotiations going on when a trade in is involved. I know the first figure I show you for the trade is usually not going to be acceptable. It happens every day. Customer always think their trade is worth more than what it's worth. So I always start with an under allowance, this gives me some room to move up on the trade. : ) Mackabee I'll illustrate: Saturday I had a customer that had been on my website and wanted to buy a truck. He printed out the particular truck and we struck a deal. Unbeknownst to me, he had been in earlier in the week and had been assisted by one of our green peas (I found this out when I put his information in the computer) When he showed up I had a customer signing up in F$I and he came in and as soon as he mentioned he wanted to look at a truck that was on our website, the SM turned him over to me. Anyway I closed the deal and my first customer comes out of finance so I grabbed the green pea and told him to take the truck to prep to get it ready for delivery and to sit with the customer and go over the owner's manuals while waiting to go into F$I. Green pea comes over and says "He has a trade, and wants to put $1000 DOWN what do I do.?" So I tell him to fill out an appraisal, get the deal folder back from F$I and appraise the car and re-do the numbers to include the trade. TO BE CONTINUED...
So off I go to take care of my first customer and go over his new vehicle. When I get done, I go back in to see how green pea is doing. The trade has been appraised and a whooppping $2000.00 put on it. He takes the folder back to F$I and they go in and finish the paper work. After the customer comes out and takes delivery of the truck he thanks me for everything and is happy as a pig in slop. Later that evening I'm at my favorite watering hole with the F$I manager that did the paper work on the guys truck and he asks me. "Why didn't you under allow on this guy's trade? Did you show him the appraisal?" he asks. "No, Green pea did I think. I was tied up and he finished it up." I replied. "Well, you could have under allowed $1800.00 and he would have been happy." he says. "What!" I exclaimed "Yeah, when he went back to my office and I'm doing his paperwork he was surprised he got $2000.00 grand for the trade. He said to me "Wow! I figured I get $200.00 not $2000.00" Needless to say green pea and I split that deal and lost $360.00 divided by two commission on the under allowance. : ( Mackabee
If anyone has the patience for a really basic query, I'd love to know what's involved in signing the final purchase order/contract at a dealership.
Can I actually read through the contract or is it one of those massive legal bundles I have no chance of understanding? Is there anything I should watch out for? Do I provide payment before or after I've inspected the car? I've already acquired a private loan, so I'll be paying by check. What kind of paperwork should I leave with?
If you are paying by cheque then all you should be leaving with is a Bill of Sale stating what is being purchased, for how much, and signed by the seller and buyer. Depending on where you live you may also leave with some registration/titling documents.
As for inspecting the car, I don't see any reason why you shouldn't see it before you pay for it.
Like landru2 said, if you are paying by check there will be no finance contract, just a bill of sale. and a bunch of other forms. However, when you do finance through a dealer the contract is much like the one you signed to get your private loan. You read through that contract, right? Dealer finance contracts are all similar, and you should always take the time to look at each paragraph, make sure you know what it is, that the blanks are filled and that the payment amounts, number of paymernts, interest rate, total financed etc. are what you expected. In short, unless you learn to read through one of those massive legal bundles you can't protect yourself.
Similarly, insist on inspecting the car before you sign. My dealer gives me the keys so I can drive it before delivery.
On new car warranty work, when a customer brings in a car complaining of something and the tech cannot duplicate the problem, does Honda still pay the dealer for the service, or do they eat it?
Case in point - my daughter's '03 Civic has been starting hard and wanting to stall when first started (5,000 miles.) It seems to do it after quick weather changes, so it could be just one of those things. But after the third time, she decided to take it in and leave it over night, and have the oil changed at the same time. You know they will not be able to duplicate the problem, but the complaint will at least be documented. I'm just curious if the dealer gets paid for checking it out (trying to understand the incentives.)
Interesting that they suggested having the tires rotated and brakes cleaned at the same time, for $99! At 5,000 miles. She said "Ah, no thanks. We'll take care of that ourselves." Brake cleaning? Disc brakes? Cheesh!
Victor, (i) Thank you thank you thank you for finishing a story swiftly. The suspense is just killing me on your cliff hangers. (ii) Green Pea: Ya know, the guy's sled was worth $2k, he got $2k, shouldn't everybody be happy? Just because he thought you might only offer $200, should you have given him only $200? I know how it works, and people are supposed to do their homework, but should he have lost $1800 so you could make $180 -- by your own math? I hear you about underallowing so you have room to negotiate... but a factor of 10? Plus, the guy didn't play by the rules either, he just accepted.
I think if car sales weren't already a certain way, this is the way we'd want them to be, no?
but the "no problem found" answer is my biggest pet peeve and I attack that philosophy in court in lemon law cases.
With regard to a stalling condition, standard diagnostics would include code scanning, and test drive to duplicate the exact conditions you've decribed and at least one second opinion. This should all be documented, including, especially, a difference in the "mileage in" and "mileage out" on the repair order.
On many occasions, technicians have written "no problem found" or "could not duplicate", but a "customer pay" labor code was used, indicating not only no warranty labor operation was used, but when the repair order was written, the complaint was entered as a "customer pay" item - there was no intention of checking the car out correctly.
In short, if there isn't a labor op, your car didn't get diagnosed.
It's easy to tell if a real diagnosis was made. If, on the entry for your specific complaint, there is a "0.00", instead of a "W" and there is no letter/number code under the complaint, then a warranty labor operation was not submitted to Honda. Also, if the mileage on the RO didn't change, how can they say they diagnosed the car for a drivability issue when it wasn't driven?
There are several Federal guidelines on automotive repair and the dealer's butt can be in a sling if the rules aren't followed.
Mack, I have been following this thread for a long time and look forward to your posts. But this last one really bothered me. You seemed to be a fair person but now, my respect level for you has fallen. Sounds like your guy got what the car was worth but you would consider "reaping" a huge profit on his trade just because you could have? Seems unfair and it's the reason why most customers don't trust car sales guys. I'm disappointed.
Mark
2010 Land Rover LR4, 2013 Honda CR-V, 2009 Bentley GTC, 1990 MB 500SL, 2001 MB S500, 2007 Lincoln TC, 1964 RR Silver Cloud III, 1995 MB E320 Cab., 2015 Prevost Liberty Coach
Mack, and all other car people are in business. It is his job to make the most possible profit for the dealership (and himself). If the customer would have been happy with $200, then he would have left happy. I doubt Mack would have hit him with $200, probably something more like $8-900, and worked his way from there, depending on the negotiation desires/ abilities of the customer.
Whenever you go into a car dealership, you have to remember that the guy across the desk from you makes a living on the profit in the deal, why give it all away in the first round?
I sell mostly internet customers, the majority of which are invoice deals on no-profit cars. The only way to make any money is by holding some profit on the trade. Usually, we don't even get to make any money there. Despite this, we have customers that come in and still expect to netotiate from these preset figures. It boggles the mind.
If the guy was only expecting $200, and Mack had offered $100 and the guy stuck with $200, and Mack gave it, the consumer would have felt pretty good. With the $2000 offer, the dealer pulled his pants down.
What if you, Mark, were buying a car? What if you looked at a car, figured you wanted to pay $2500 for it, but offered $1000, just to see what the guy would do? When he said "A grand, heck, I was only gonna ask $500" - does that make either one of you disrespectful? Certainly not.
At the same time, let's put the shoe on the other foot. If yo had a car you thought was worth $1000, but you figured you could only get $500 and some guy offered you $2500, would you take it? If you took the guy's offer, does that make you a thief? I don't think so.
TO be fair, I think that the "possibility of profit" is NEVER fully known -- there is ALWAYS a risk of leaving 'something oh the table'.
In this case, mack got news (second hand) that the buyer may have left as much as $1800 bucks 'ott'. Maybe yes, maybe no.
Folks, there is ALWAYS some "mind game" going on between any kind of buyers & sellers, whether it is housing, jewelery, high end clothes, cars ...
This particular buyer might have been joshing with the F&I guy, or maybe the green pea didn't prod enough to see what that buyer WANTED to get.Maybe even Mack should have given the newbie a bit more 'guidance'. We'll never know...
I know of the "little white lies" I told car dealers when I was younger and all the stuff I've caught my customers wrapped up in.
You're certainly right - there's always a game and it's always two-sided.
I just can't get over people flaming dealers about not being honest, playing games, or the worst yet, having a manager whose job it is to sell cars, and folks still gripe considering the hidden cards they have in their pockets.
Regardless of how minor it may be, most consumers walk into a dealer with intent not to be fully honest or fully disclose information on their trade's condition, their job history, credit info, etc. How can folks have an attitude against dealers when it's a two-way street.
The problem is, and this is a big one - the dealer is usually the only one who is sued for "non-disclosure". Suing customers is bad business, but I guarantee if it happened a few times, people wouldn't lie about their trades so much.
What I do not understand is: why would someone lie? It will (usually) be detected. I mean no car dealer is going to let me leave with the car without running a credit check unless I pay with cash....Same thing with job history.
And I am sure the dealer knows how to tell if a car is OK. I find no reason to lie. I might hold back what I am really able to spend, instead of what I want to spend, but that is negotiation. I can not imagine any advantage of going in a saying that I have good credit when my score is really 550.
I am curios if there is a way to perform a service record search of a particular vehicle through a dealership records. The reason I am concerned is I believe a demo automobile I am considering purchasing has a history of problems. Carfax would not have any info on this type of problem since I do not believe it was involved in any accident. The car is a '02 Infiniti G35 with 5k miles (demo model. Sales guy told me this car was purchased used for the sole purpose of demo. I would hate a purchase a '02 car with a history of problems that only the dealer knows about.
Manamal - why lie? I don't know, but it happens all the time. My brother in law had trouble with his Mustang's air conditioner. It leaked. Wouldn't hold a charge. He got a buddy to give it a fresh shot the morning of trade-in day. He laughed about it later. The used car guy checked the air (we're from Texas, it's a big deal) and it worked fine. When asked about the overall mechanical condition of the car during appraisal, he said everything was great and kept going on about how clean the car was. Why lie? To save money, but know the dealer was on the hook for a $600-900 air conditioner repair, because no one is going to buy a used car from a dealer without good a/c - not in South Texas.
People lie about time on the job, how good their credit is, how much they make - that's probably the biggest one. At 8:00 on a Saturday night, you can't call "Jones Construction" and verify income and time on the job. The buyer ends up with more than they can afford and the lender comes back on the dealer because it looks like the dealer fudged the guy's credit application!
What I am actually seeking is to get a copy of all the work that was performed by a dealer service department. I don't think you will get a complete record if the person chooses not to give it to you. Bottom line is I would like to be able to get te records myself or through a third party.
This should clear everything up for everybody. The truck the customer purchased was offered for sale on my website for $250.00 over invoice or $22,750.00 this truck retails for $24,985.00. The customer still wanted to negotiate and offered 5% below that which would have been $1137.50 less or $21,612.00. I asked how he arrived at that figure and he said "You guys have a 5% margin from the invoice." I showed him the invoice which was $22,500.00 then he made one last offer. "Ok, $22,500.00" he said "Is that $22,500.00 plus tax, title, and fees?" I asked "Yes." he replied. So I made the deal at invoice. On his trade I would have first asked what he was expecting to get for it and gone from there. I would have not insulted the customer by offering $200.00 although in his mind that's what he thought it was worth. I would have probably started at $1000.00 and go from there. It would be a perfect world if trades were worth what the guides say they are worth and if everyone could buy a new car at invoice. Reality is something else. : ) Mackabee
If you are present with the service writer and the salesman and the records for that VIN are pulled up and not tampered with, you should be OK. If they're not willing to do that, then I'd be suspicious.
Thanx for the post. I guess I will have to put my trust i the salesman and hope he didn't omit some or all of the record(s) when he goes outside the room to get them.
I guess I can see why people might misrepresent the condition...heck, I once sold a car with a knock....put premium in right before I sold it, so no knock. It was a '95 taurus...the knock started under warentee, but the dealer claimed it was not a problem.
As for lying about income or credit, that is just stupid....cause they will have to either return the spotted car or pay less favorable terms.
Returning a spotted car is embarassing...when your neighbor asks what happened to your new car.
This is actually a strange series of questions I have. I really like cars and so I thought maybe I can go and become a car sales person (probably at a luxury brand). The problem is, I have a full-time job as an electrical engineer already. I would only be able to work maybe two nights a week and maybe every Saturday. Since I am doing it for the love of the cars and not to make a living, I wouldn't be pushy nor high-pressured, so my sales numbers would probably be pretty low. So my first questions are:
1. Can someone become a car sales person when they only want to do it for maybe 15 hours a week? Would any dealership be willing to hire someone in my circumstances? Would the other sales people eat me alive because I am competing for their income when I don't need it? 2. Is what I am asking too strange?
The questions get even more wild after that. I remember reading Terry's profile (and maybe Bill's too) that they started out as sales people and then bought into a dealership and became partners.
3. I was wondering how much money is needed to do something like that and if the opportunity is available on at a new dealership? I figured since my stocks are not making any money, maybe I can put my money where my passion is, cars. 4. Is it possible for someone totally outside of the business to be a partner in a car dealership just as an investment and maybe to hang around the dealership and play with the cars?
I'd appreciate any and all responses. Yes, I know what I am asking is kind of crazy, but I figured there are many nice knowledgeable people in the business here, maybe I can get some answers I have always wanted.
I am not a car salesman, nor am I working in that field right now. But my father did. Anyway, I think I can answer some of your questions, I am sure the pro will correct me if I am wrong.
1) Doubtful, but probably wouldn't hurt to ask. But thinking a little more about it, the only place that would accept someone working parttime is probably one of those screamer ad high turnover volume store in the first place. I really don't think they are such a nice place to work in from the start anyway. Part time or not.
2) No, not a strange questions at all. I know people that asked this questions before, myself included. 8)
3) Terry answered this question before, and so did Bill. You are better off just putting the money in the bank and collect interest, you will get a safer return. The bare minimum to start a used car lot is roughly 3 million I think, depending on location. You will need to have a lot, with a building for customer/salesman/F&I dept. ect. A repair bay. A lot to display the cars. A bank roll to buy cars to put on the lot, etc.
4) Sure, if you have money to burn and don't care a bit about losing any of it. 8)
Honestly, I think a safer bet is this for car nuts with money to burn and not sure what to do with it. Go into an automotive repair school. Get yourself certified to at least repair majority of the "ordinary" cars on the road. THEN, get yourself setup to repair high end cars, like BMW, MB, Ferrari etc. This way, you can either get yourself into some high end dealerships thru the shop route, or open your own high end exotic car custom/repair shop. A much safer investment of your money, IMHO.
Anybody who has ever done any sort of even "psuedo-business" relationship (like group lottery ticket buying at work) knows there are very, very few folks willing to be TRULY a silent partner...
It is one reason why there are so few publicly traded frims that own car dealerships -- it is hard not to get "too many cooks spoiling the broth".
That said, if you really are interested you ought to graph out the performance of these companies before you decide to switch from a nice boring index fund:
I got into the buisness " For the love of the cars" I worked 50-60 hours a week. ( average for the buisness) I was very friendly and Low pressure. Customers loved me.... and then continued shopping for a better deal. Yes I had plenty of time to play with the cars which I Loved. To make a short story not to sweet 50-60 hours a week in the buisness and I was barely able to pay the bills using my selling strategy. Which sounds to be the same as yours. 15 hours a week, I doubt if they will even hire you. Good Luck though.
if you read about the pulpracing crew it seems that basically that is what they've decided to do-- they blow what should be their 401K money on exotic cars and even race carts mostly becuase they love to race...they get to hang around with the mechanics all the time when they break stuff...they get invited to some events by the dealers just beucase they are so likely to spend money...
.... Most of the guys here have answered your questions .. a part time guy at a high end store never works out for him .. or the dealer and especially for the other folks on the sales staff, it spurns a lot of animosity.
Most times, a silent partner rarely works out .. even in the smaller 30 car inventory stores that you see. See the deal is, it's not being in the car business, it's knowing the car business ..
More and more 2/3rd generation stores are selling out, only because the sons or daughters just don't get it, whether it's their personality or too much college (PhD - papa has a dealership) .. it's easy to burn through $100/$200,000 a month because a partner or a flaky daughter prefers to order or buy vehicles that they like - I see it everyday.
it's easy to burn through $100/$200,000 a month because a partner or a flaky daughter prefers to order or buy vehicles that they like - I see it everyday.
The only job I ever had at a dealership was as a detailer and lot boy. My job was to wash all the new cars, arrange the lot according to the GSM's daily whim (what a freak that guy was!!), clean up used cars going on the lot, and prep cars for new customers.
The daughter of the owner loved horses. Dad was a multi-millionaire from selling Pontiacs in So Cal and his hooby was horse racing. He had a ranch and bred a few horses. Daughter needed something to do during the time away from places like Santa Anita and Hollywood Park so she "managed" the dealer's horse trailer sales. Yup, Pontiac and Toyota dealers were selling Dorsey horse trailers. During the summer I worked there I never saw one trailer sell. Sure washed a lot of them - good thing for me they weren't "used".
Comments
Who makes the final decision on the selling price of the new vehicle? Desk Manager/Salesperson, etc. On that same note, who decides what the trade is worth? Just a curiosity... Wondering if there are actually "whippings" that go on in that office or not.. =o)
Is there such a thing as a "one time only" offer? I have heard it many times, but honestly believe that if the offer is made once, it will be "sorta" easily achievable later especially since most of the dealers I have dealt w/ recently keep files on their customers.
If you car dealers out there don't want to answer, no problem, just curious especially on question number 1. I have found a bunch of great information on this forum, and figured that it can't hurt to ask.
If a customer is buying a car that sells at MSRP and is a hot seller will this have any effect on how the trade is evaluated for value?
I can see this scenario happening:
Customer goes to buy 2003 Blahmobile. Dealer is having a hard time keeping them on the lot. If the dealer sells the Blahmobile at MSRP he makes $3000. Customer has a 2000 Blahmobile he wants to trade in. Now dealer knows he can sell the 2003 Blahmobile to the next guy in line. Might he undervalue the trade of the 2000 Blahmobile by say $500-$1000 to make even more money when he resells it? Or does the dealer say to himself, I am making the max profit on the 2003 Blahmobile so I will give the most I can for the trade.
bret- "Is that really a "general rule"? I don't think so. A trade is worth what it is worth."
Well if that is so, then why are there so many different values for used cars (wholesale, retail, trading to a dealer, selling to an individual, buying from a delaer, buying from an individual, it makes my head swim). I totally agree with you, a trade is worth what it is worth. If it is worth $10,000, that is the value whether I trade it to you, sell it to my neighbor, buy it from you, or buy it from my neighbor.
What I meant by my statement that you commented on was that I have read dealers post here about what they call the different types of buyers. One of the types they mention is a trade in buyer. According to them, this buyer is mainly concerned with the value the dealer places on his trade and not the cost of the new car. So the dealer may offer $2000 above the true value of this buyer's trade in to make them happy, but he increases the cost of the new car $2000 above his lowest selling price to compensate. This keeps the gross profit the same as if he offered a lower value for the trade but also sold the new car for less.
I may not be using these terms right, but I see it this way. The buyer with a trade is trying to pay invoice for the new car and get retail for his trade (low end of new car price, high end of trade value). The dealer is trying to get MSRP for the new car and offer wholsale for the trade ( high end of new car price and low end of trade value, this maximizes his profit on the two cars). Most car deals fall somewhere in between these two extremes with both parties negotiating the cost of the new car and the trade value.
But this gets skewed when the new car in question is a hot seller ( I am sure the same holds true in the opposite direction if the new car is a dog). Basically the dealer holds all the cards in this special situation because he has what a lot of people want and are willing to pay MSRP for. I was just wanting to know how or if this effected how the dealer evaluates the buyers trade. It would make sense to me that they may undervalue trades (to maximize profits), because if you do not buy the new car, the next person on the waiting list will.
Your trade is evaluated by the same manager, usually, unless it's a larger store that has a used car manager.
I've always used "one time" deals because I know that if I don't take you out of the market today, you'll likely (per National avg) buy within 48 hours and I won't have another chance for 4 years.
With "trade" buyers, you have to educate the customer on the ACV (actual cash value) of their trade and we may over allow to make the deal if it's a clean car that we want for our used car lot. If it's something that will sit on the lot and not sell for 3 to 4 months we will try to convince the customer not to trade or to sell the car themselves. For example: I sold a Highlander 2wd Limited last week for $1800.00 over invoice, which was about $100.00 less the TMV. The customer had only been to another Toyota store and they ticked him off. He had a 96 Buick Park Avenue, very clean with 36k miles on it. He wanted no less than 8k for it. Although the car was very clean we only offered 5k for it. The other store had offered the same but were not discounting the Highlander a bit. He came by a couple of times and when we finally did the deal he pulled the trade out, we offered $500.00 more for the trade but he still wouldn't let it go for that. He said "Looks like no one wants my car. Is something wrong with it?" he asked. "No Sir, it's a very nice car. But the reality is that's what it's worth to us. You'd be better off selling it yourself."
Mackabee
Most dealers don't retail a vehicle over 3-4 years old, no matter how nice it is. When you get into lending terms, especially where loan length is involved, it's tough to get more than a 24-36 month loan on a vehicle older than a few years.
Besides, if you an make out way ahead (figuring sales tax offsets) by selling on your own, you're money ahead.
No one has yet to answer my question: do dealers under allow on trades when a hot selling new car is involved in the deal?
: )
Mackabee
Surely you can see that these two parties will put a different value on the same car.
landru- yes I can see that difference, it is just confusing. Used cars are a complicated animal.
: )
Mackabee
I'll illustrate: Saturday I had a customer that had been on my website and wanted to buy a truck. He printed out the particular truck and we struck a deal. Unbeknownst to me, he had been in earlier in the week and had been assisted by one of our green peas (I found this out when I put his information in the computer) When he showed up I had a customer signing up in F$I and he came in and as soon as he mentioned he wanted to look at a truck that was on our website, the SM turned him over to me. Anyway I closed the deal and my first customer comes out of finance so I grabbed the green pea and told him to take the truck to prep to get it ready for delivery and to sit with the customer and go over the owner's manuals while waiting to go into F$I. Green pea comes over and says "He has a trade, and wants to put $1000 DOWN what do I do.?" So I tell him to fill out an appraisal, get the deal folder back from F$I and appraise the car and re-do the numbers to include the trade.
TO BE CONTINUED...
Needless to say green pea and I split that deal and lost $360.00 divided by two commission on the under allowance.
: (
Mackabee
If anyone has the patience for a really basic query, I'd love to know what's involved in signing the final purchase order/contract at a dealership.
Can I actually read through the contract or is it one of those massive legal bundles I have no chance of understanding? Is there anything I should watch out for? Do I provide payment before or after I've inspected the car? I've already acquired a private loan, so I'll be paying by check. What kind of paperwork should I leave with?
I guess you can tell I'm a first-time buyer...
As for inspecting the car, I don't see any reason why you shouldn't see it before you pay for it.
Similarly, insist on inspecting the car before you sign. My dealer gives me the keys so I can drive it before delivery.
Case in point - my daughter's '03 Civic has been starting hard and wanting to stall when first started (5,000 miles.) It seems to do it after quick weather changes, so it could be just one of those things. But after the third time, she decided to take it in and leave it over night, and have the oil changed at the same time. You know they will not be able to duplicate the problem, but the complaint will at least be documented. I'm just curious if the dealer gets paid for checking it out (trying to understand the incentives.)
Interesting that they suggested having the tires rotated and brakes cleaned at the same time, for $99! At 5,000 miles. She said "Ah, no thanks. We'll take care of that ourselves." Brake cleaning? Disc brakes? Cheesh!
(i) Thank you thank you thank you for finishing a story swiftly. The suspense is just killing me on your cliff hangers.
(ii) Green Pea: Ya know, the guy's sled was worth $2k, he got $2k, shouldn't everybody be happy? Just because he thought you might only offer $200, should you have given him only $200? I know how it works, and people are supposed to do their homework, but should he have lost $1800 so you could make $180 -- by your own math?
I hear you about underallowing so you have room to negotiate... but a factor of 10? Plus, the guy didn't play by the rules either, he just accepted.
I think if car sales weren't already a certain way, this is the way we'd want them to be, no?
-Mathias
East Lansing, MI
With regard to a stalling condition, standard diagnostics would include code scanning, and test drive to duplicate the exact conditions you've decribed and at least one second opinion. This should all be documented, including, especially, a difference in the "mileage in" and "mileage out" on the repair order.
On many occasions, technicians have written "no problem found" or "could not duplicate", but a "customer pay" labor code was used, indicating not only no warranty labor operation was used, but when the repair order was written, the complaint was entered as a "customer pay" item - there was no intention of checking the car out correctly.
In short, if there isn't a labor op, your car didn't get diagnosed.
It's easy to tell if a real diagnosis was made. If, on the entry for your specific complaint, there is a "0.00", instead of a "W" and there is no letter/number code under the complaint, then a warranty labor operation was not submitted to Honda. Also, if the mileage on the RO didn't change, how can they say they diagnosed the car for a drivability issue when it wasn't driven?
There are several Federal guidelines on automotive repair and the dealer's butt can be in a sling if the rules aren't followed.
Mark
Whenever you go into a car dealership, you have to remember that the guy across the desk from you makes a living on the profit in the deal, why give it all away in the first round?
I sell mostly internet customers, the majority of which are invoice deals on no-profit cars. The only way to make any money is by holding some profit on the trade. Usually, we don't even get to make any money there. Despite this, we have customers that come in and still expect to netotiate from these preset figures. It boggles the mind.
Ed
If the guy was only expecting $200, and Mack had offered $100 and the guy stuck with $200, and Mack gave it, the consumer would have felt pretty good. With the $2000 offer, the dealer pulled his pants down.
What if you, Mark, were buying a car? What if you looked at a car, figured you wanted to pay $2500 for it, but offered $1000, just to see what the guy would do? When he said "A grand, heck, I was only gonna ask $500" - does that make either one of you disrespectful? Certainly not.
At the same time, let's put the shoe on the other foot. If yo had a car you thought was worth $1000, but you figured you could only get $500 and some guy offered you $2500, would you take it? If you took the guy's offer, does that make you a thief? I don't think so.
In this case, mack got news (second hand) that the buyer may have left as much as $1800 bucks 'ott'. Maybe yes, maybe no.
Folks, there is ALWAYS some "mind game" going on between any kind of buyers & sellers, whether it is housing, jewelery, high end clothes, cars ...
This particular buyer might have been joshing with the F&I guy, or maybe the green pea didn't prod enough to see what that buyer WANTED to get.Maybe even Mack should have given the newbie a bit more 'guidance'. We'll never know...
I know of the "little white lies" I told car dealers when I was younger and all the stuff I've caught my customers wrapped up in.
You're certainly right - there's always a game and it's always two-sided.
I just can't get over people flaming dealers about not being honest, playing games, or the worst yet, having a manager whose job it is to sell cars, and folks still gripe considering the hidden cards they have in their pockets.
Regardless of how minor it may be, most consumers walk into a dealer with intent not to be fully honest or fully disclose information on their trade's condition, their job history, credit info, etc. How can folks have an attitude against dealers when it's a two-way street.
The problem is, and this is a big one - the dealer is usually the only one who is sued for "non-disclosure". Suing customers is bad business, but I guarantee if it happened a few times, people wouldn't lie about their trades so much.
And I am sure the dealer knows how to tell if a car is OK. I find no reason to lie. I might hold back what I am really able to spend, instead of what I want to spend, but that is negotiation. I can not imagine any advantage of going in a saying that I have good credit when my score is really 550.
People lie about time on the job, how good their credit is, how much they make - that's probably the biggest one. At 8:00 on a Saturday night, you can't call "Jones Construction" and verify income and time on the job. The buyer ends up with more than they can afford and the lender comes back on the dealer because it looks like the dealer fudged the guy's credit application!
: )
Mackabee
As for lying about income or credit, that is just stupid....cause they will have to either return the spotted car or pay less favorable terms.
Returning a spotted car is embarassing...when your neighbor asks what happened to your new car.
They'll beg the lender to continue the deal.
This is actually a strange series of questions I have. I really like cars and so I thought maybe I can go and become a car sales person (probably at a luxury brand). The problem is, I have a full-time job as an electrical engineer already. I would only be able to work maybe two nights a week and maybe every Saturday. Since I am doing it for the love of the cars and not to make a living, I wouldn't be pushy nor high-pressured, so my sales numbers would probably be pretty low. So my first questions are:
1. Can someone become a car sales person when they only want to do it for maybe 15 hours a week? Would any dealership be willing to hire someone in my circumstances? Would the other sales people eat me alive because I am competing for their income when I don't need it?
2. Is what I am asking too strange?
The questions get even more wild after that. I remember reading Terry's profile (and maybe Bill's too) that they started out as sales people and then bought into a dealership and became partners.
3. I was wondering how much money is needed to do something like that and if the opportunity is available on at a new dealership? I figured since my stocks are not making any money, maybe I can put my money where my passion is, cars.
4. Is it possible for someone totally outside of the business to be a partner in a car dealership just as an investment and maybe to hang around the dealership and play with the cars?
I'd appreciate any and all responses. Yes, I know what I am asking is kind of crazy, but I figured there are many nice knowledgeable people in the business here, maybe I can get some answers I have always wanted.
1) Doubtful, but probably wouldn't hurt to ask. But thinking a little more about it, the only place that would accept someone working parttime is probably one of those screamer ad high turnover volume store in the first place. I really don't think they are such a nice place to work in from the start anyway. Part time or not.
2) No, not a strange questions at all. I know people that asked this questions before, myself included. 8)
3) Terry answered this question before, and so did Bill. You are better off just putting the money in the bank and collect interest, you will get a safer return. The bare minimum to start a used car lot is roughly 3 million I think, depending on location. You will need to have a lot, with a building for customer/salesman/F&I dept. ect. A repair bay. A lot to display the cars. A bank roll to buy cars to put on the lot, etc.
4) Sure, if you have money to burn and don't care a bit about losing any of it. 8)
Honestly, I think a safer bet is this for car nuts with money to burn and not sure what to do with it. Go into an automotive repair school. Get yourself certified to at least repair majority of the "ordinary" cars on the road. THEN, get yourself setup to repair high end cars, like BMW, MB, Ferrari etc. This way, you can either get yourself into some high end dealerships thru the shop route, or open your own high end exotic car custom/repair shop. A much safer investment of your money, IMHO.
It is one reason why there are so few publicly traded frims that own car dealerships -- it is hard not to get "too many cooks spoiling the broth".
That said, if you really are interested you ought to graph out the performance of these companies before you decide to switch from a nice boring index fund:
http://corp.autonation.com/investors/default.asp
http://www.sonicautomotive.com/home_3frameset.asp
http://www.group1auto.com/investor.htm
1. No, no, yes
2. Yes
: )
Mackabee
Might be what you are looking for...
Most times, a silent partner rarely works out .. even in the smaller 30 car inventory stores that you see. See the deal is, it's not being in the car business, it's knowing the car business ..
More and more 2/3rd generation stores are selling out, only because the sons or daughters just don't get it, whether it's their personality or too much college (PhD - papa has a dealership) .. it's easy to burn through $100/$200,000 a month because a partner or a flaky daughter prefers to order or buy vehicles that they like - I see it everyday.
Terry.
The only job I ever had at a dealership was as a detailer and lot boy. My job was to wash all the new cars, arrange the lot according to the GSM's daily whim (what a freak that guy was!!), clean up used cars going on the lot, and prep cars for new customers.
The daughter of the owner loved horses. Dad was a multi-millionaire from selling Pontiacs in So Cal and his hooby was horse racing. He had a ranch and bred a few horses. Daughter needed something to do during the time away from places like Santa Anita and Hollywood Park so she "managed" the dealer's horse trailer sales. Yup, Pontiac and Toyota dealers were selling Dorsey horse trailers. During the summer I worked there I never saw one trailer sell. Sure washed a lot of them - good thing for me they weren't "used".
cherokeelmt, I am sorry your stint in the business didn't work out. Good luck in whatever you end up doing next.
dtwleungnyc, thanks for the advice on automotive repair school, I will probably look into it.
I will stick to my usual behavior of reading Edmunds and window shopping at car lots (without wasting sales people's time).
Thank you for your comments and wisdom.
Paul