how few salesmen actually know how to run a successful business. Some can't even understand a simple model of a good business. Well, maybe they just refused to try to understand. People often discount quickly that which they can't understand.
that at the end of the day, the human character is so suspect that we continue to breed greed and dishonesty into our general make-up.
I accept that it will not change in my lifetime, but I lament the fact that something so wanted(i.e. a car) is in the hands of people who are notorious for being unethical and deceitful to their buying public.
The only problem I see is that very, very few dealers can survive without teeth. The old sayings about running with wolves and swimming with sharks come to mind.
For me, I lust, I drive, I take my time, I evaluate...and if I pay an extra $500 out the door, I can deal with it...but I am not gonna be the fish that win's my salesperson "cheat of the month."
This is just another sad regurgitation of the "inconsiderate seller/buyer" arguments. No such thing as an inconsiderate BUYER...if no one spends a buck at your store, you lose a job and go back to making tacos. Then again, most salespeople have a tough road to ride...the precept that all dealers are dishonest will burn the psyche of most people quick enough, either they will sink (honesty gets in the way of profits) or learn to swim (growing their own teeth to fend off the other predators).
Customers...well, most just want a simple exchange. Fair price, fair trade, and good service. It seems simple, and then you realize that no person likes to feel like they left a dollar on the table, either theirs or the other guy.
If I turn a deal that is $500 better than average, that is my grift...if the dealer turns me for $500 over the TMV...that is his. Somewhere in the middle is the real price...and no one is willing to believe it anymore. A person shouldn't have to spend a month reading and researching and driving cars to make a decision...but if he is smart...he will do just that.
that believes that "dealers would have to agree...would be a monopoly situation" should be stripped of his sales license and have to go back to school and take his FTC Anit-trust training all over again. This is a VERY important concept for salesmen to understand. How can ones that have no clue of what it is, be expected to abide by it?
Also, this concept of "dealers having to agree" was not part of the idea either.
"People often discount quickly that which they can't understand."
You haven't made sense YET. This wonderful Disney-type atmosphere that you're talking about couldn't exist for more than a day or two simply because consumers can always beat a price somewhere with a little work.
When dealer A advertises a car at $21,500 and dealer B has the same car at $21,300, dealer A has to lower their prices to remain in business - that's very simple. Then the horserace begins of which dealer can cut themselves lower in order to attract customers AND stay in business, which is exactly the same situation as we have now.
What you're implying is a novel idea, but just like retail clothing stores, prices aren't always fixed, there's always a sale of some sort and Wal-Mart has the item cheaper than Target, or vice versa.
So, to sit back with one price posted on your sign, you can expect your business to drop off immediately as soon as folks figure they can get it cheaper somewhere else. When that happens, you HAVE to change your strategy to stay alive, pay the bills, pay the employees, etc.
What I'm saying is that your idea, while a great one for folks who want an easy buying experience (realistically only 10% of the buying public), won't work in the real world.
I'll give you an example. In Wyoming, coming up on Winter, we had a two wheel drive Ford Ranger (new) on the lot. It had been there 6 months already, and there was no way it was going to sell between October and April, so we needed to get rid of it. We sold it with a $250 spiff to the lucky salesman, and $500 below holdback - $750 below the holdback mark on invoice - holdback was another $500 or so, so we were selling the truck at $1250 BELOW invoice.
A kid and his folks came in looking at the truck (it was in the paper at this low price) because the kid was going to college in CA, so the 2WD would work for him. We showed the folks the ad price, plus TT&L and they got mad. We pulled the invoice and I used the calculator to show them what we were selling the truck for (net price was $8,400). THEY WANTED TO SWITCH TO ANOTHER TRUCK SO THEY COULD "DICKER". THEY DIDN'T WANT TO BUY A TRUCK UNLESS THEY COULD NEGOTIATE - PERIOD. They walked, but came back a few days later after 2-3 phone calls from me and we made the deal.
This college student and his parents thought you weren't telling him the truth when you posted a price and showed him the invoice and offered him the same price that was advertised. He didn't trust you. Once he believed that you were telling the truth, he was OK with the deal. Dickering creates distrust because the buyer always thinks "If he was willing and able to sell it for the price we settled on, why doesn't he just post that price on the window in the first place. He must have been just trying to see how much he could gouge me for."
"Once he believed that you were telling the truth, he was OK with the deal."
You figured they didn't believe me?
Let's understand something - I haven't lied to you or anyone else and if you claim I have, then you're the one not being honest - I don't appreciate it and you should stop immediately.
You're a lost cause. They believed the invoice just fine and they should, since it's a violation of federal law to misrepresent something like that.
I don't appreciate the insinuation that I would manipulate the price or invoice. You may have been lied to by some car dude in your past, but it certainly wasn't me.
People WANT to negotiate - everybody, in some way, wants to negotiate. That's how our Dads and uncles trained us.
I never said that you lied to anyone. How do you know they believed the invoice or that there wasn't some other holdback, kickback or other incentive your dealership was getting to get rid of the truck? Were you inside of his mind? He may have told you anything but you don't know what he was REALLY thinking. People don't just want to negotiate, they want to know that they got good value for a low price on the vehicle they want.
for a vehicle with only $900 markup to MSRP and a retail price of $11,550 (there's a $1,000 rebate, also) is a great deal.
I know what they were thinking because they told me what they were thinking - I didn't have to guess. After 10 years as a cop, I can certainly detect when someone's telling the truth or full of fluff.
You insinuated I/the dealership lied during several statements in your posts. I don't like being associated with liars, I don't like it being insinuated that I'm lying, especially by someone who doesn't know me and certainly doesn't know anything about retail.
It is a good deal unless the dealer is making $2000 off of that deal. I am not saying that you were making that much but there are some out there that do business that way and he may have dealt with them in the past. I don't appreciate the condescending additude with which you address me since you don't know me either. I don't like being told how much or little I know about something by a former car saleman who doesn't know the difference between a monopoly and price fixing either.
about how it should be. I never said that I thought it would ever happen. Some were complaining about the reputation that car salesmen have. I don't deserve to be bullied or threatened by you Zues and I refuse to allow it. If you have a better proposal for how to improve the reputation of car salesmen, I would enjoy hearing it.
Interesting discussion from 155 to 160. Please forgive my verbosity, but I can't resist making a couple of comments.
1) It seems to me that there is a difference in stating that some customers will automatically distrust a car salesman, than in implying that a particular salesman lies. I think the former is frequently true regardless of the actual salesman, and can see why a particular salesman might feel defensive.
2) The discussion about pricing and profits is instructive. Where information is freely available, "invoice price" and MSRP are less relevant. The question becomes, "what did the dealer actually pay for this vehicle, including any incentives and holdbacks". It seems to me, that saying I'm selling at 2% over invoice (when you are also making an additional 2% on holdback) is technically honest, but only because terms of art are in use. Some on this site may know more than I do about car buyers, but on business people generally and on lawyers my experience is as good as any. I'll tell you, the care used in car language is no different than the kind of lawyers quibble that business folk complain about daily. It is honest, but it sure isn't clear. To me holdback, and dealer incentives are cost savings, no more, no less. What people avoid discussing, is what you think a competitive profit and/or profit margin are on a car sale.
3) The more people undestand about where the money flows are in the new car business, the more uncomfortable they become. I have read the same studies about people liking to haggle, but I take it with a grain of salt. My feeling is that fewer people would haggle (they would still comparison shop for a lower price) if the same standards for measuring cost and profit were used everywhere.
You may ask, "why should a dealer be forced to disclose every cost advantage he has?". And you would be right, all dealers would make less money because margins would come down universally. On the other hand, as information becomes universally available on pricing, and on vehicles, one wonders why we have middlemen (dealers) at all. Why not just a factory owned test drive center?
The thing for me is that what I consider a good deal has little to do with dealer profit (or loss). A yugo at true cost is not a good deal (in my opinion). A good deal is buying a car I am comfortable with at a price I am comfortable with using techniques I am comfortable with.
A good deal does not leave me feeling bad about myself, either that I payed too much, or that I had to deal with sleeze. For example, last summer, I bought a Sienna at a very good price. However, at F & I, I had a huge hassle. And, I felt like I was being jerked around. The sales person also (tried) to make me feel guilty about the price. It was not a good deal.
Same van for the same price at another dealer may have been a good deal.
That is a great idea. It would also save manufacturers money since they would not have the dealers and salesmen to pay. You could test drive the model you wanted and order it with all the options you wanted direct from the factory. What do we do about service, certify different independently owned repair shops to do work on each particular make?
A good deal is one when both the customer and salesman go away happy. One with a new vehicle at a price he is comfortable with ; one earning his pay and having a satisfied customer.
Point taken on the Yugo and I agree dealing with sleaze is completely. Either is enough reason to switch maker or dealer. But for the same vehicle between dealers who are reasonably civil, I'd still rather pay less.
Bigorange,
Re service: I guess do what we do now. As I understand it, service is treated as a distinct profit center anyway. So there could be factory service. Or, and I am grossly ignorant here, why not independent shops (if certification is rigorous, equipment is standardized, and parts are factory). I'd rather have the manufacturer spent money on a strict monitoring program.
I mean, even my BMW dealer orders parts from a central distribution warehouse now. Every good service department I know complains about the time it takes to source and train good mechanics. Wouldn't some premium service centers be a great idea -- factory owned or not.
As to test drive centers, BMW, Lexus, M-B have been Ok. They actually have demo cars in all models. But, others, (including in my own experience -Toyota, Saburu,Linoln and Chevy) demo new cars off the lot. I don't know about you, but I believe in a break in period and I like to do it myself, gently. With test drive centers, where the demo cars were not being sold as new, you should get to a better test drive, without worrying about the break in period for the poor jerk who actually buys the car. I like to buy cars with under 10 miles, and I try to drive non?dedicated demos very carefully.
I'll try to remain civil despite your lack of the same courtesy. You're completely missing a couple of small concepts in your diatribe. One, this is a free market economy. Unless you buy all the dealerships in the world, you aren't going to get them all to agree to anything. Secondly, unless you have the controlling interest in any one of these dealerships, you don't get a vote in how they set their pricing, arrange the cars, or anything else.
As in most situations, a business sets its prices based on the market conditions. The majority of customers like to haggle, thus the pricing is set up that way. There are avenues for those who don't like to haggle- buying clubs, internet departments, etc. Why should a dealership structure itself to please 1% of its customers, which represent the smallest profit margin?
The only businesses that could operate under your scenario would be congress or the post office.
at least the ones I have been to, tend to have demonstrators which are used solely for that purpose. They are, generally, one of each model kept at the dealership solely for test drives. Ultimately, they will be sold as "demonstrators" to people who wish to pay less for a car that has been used in this fashion. At some dealerships, you may drive out with a "new" car which has been driven by customers prior to your purchase. I do not consider a car with 300 miles on it (used in test drives) to be "new".
abtseller,
Yes, as is currently set up, dealers have a contractual arrangement with the manufacturer which, of course, could not be nullified. We are merely speculating that it would be nice if dealerships were factory owned. Query how long it would take for contracts to expire or for dealers to be bought out. Also, there may well be antitrust issues with factory owned dealerships. I would submit, however, that conditions existing when these antitrust rules were drafted have altered considerably. Consumers, given much competition between brands, might do better if the middleman's commission were eliminated. I'd even be happy if dealers stay where they are and we "few" non?hagglers and internet buyers could buy direct from the factory.
managers (at my dealerships anyway). All of the cars on the lot are available to be test driven by prospective customers. Demos are still sold as new cars when someone buys one, but they're usually discounted to compensate for mileage.
I am not sure what I have done to you that you think is not civil. I am also not sure why you think I am trying to get dealers to agree on anything. I just don't see why car dealers complain when they are classified as generally dishonest even though many of them are honest unless they are willing to insure that gouging the customer cannot happen in their dealership. My definition of gouging would be to advertise a price on the window, in the media or as the first price a buyer is given that is $2000 more than they are willing to take for a particular car. If salesmen will take $2000 less, why do salesmen attempt to try and get that extra $2000 out of us potential buyers. That's what gives them the reputation. So don't complain when people talk about it.
I disagree that it's dishonest of a dealer to charge $2000 more than the bare minimum he willing to sell the car for. It's called maximizing profits. Dealers aren't charities. If a buyer doesn't do their homework, why should they be charged the same price as someone who does? That doesn't happen in any other retail situation. It's just that difference in price for small-ticket items won't be that big (maybe $50-100), so people don't get as pissed off when they find out someone paid less then them.
is the key question. Is the bare minimum what he paid for the car, what he paid + his expenses or what he paid + expenses +5%. Car dealers can make a whole lot of money even without gouging even using my definition. Maybe he is hungrier (willing to take less) on one day or during one month than he is the next. I know that happens but he could tell me that up front. Why can't he "maximize his profits" by giving the best service, having the most knowledgeable and courteous sales staff and make customers want to come back thereby increasing his customer base instead of gouging customers who haven't done 3 months of research, been in the business before or have a brother in the business.
...."Why can't he "maximize his profits" by giving the best service, having the most knowledgeable and courteous sales staff ...."
the fact that the loudest and sleaziest dealers sell the most cars hurts the professional way of selling the most. If consumers would avoid these types of dealerships things would change,...but as long as yelling and acreaming sells cars there isnt a reason to change....It's hard to complain about results that work very well!!
I don't advocate sleazy dealerships....but they are nearly impossible to compete agaisnt.
Let's say I own a Ford dealership and I have 1 Taurus loaded with options and my price is $25,251. If Joe comes in, that's what he pays. If mary comes in, that's what she pays. If Larry comes in, that's what he pays. Larry may say, "I can get a Taurus with all the same options at Joe Schmoes for $24,900." Then you say, "Please go to Joe Schmoes and buy it then."
Then say,
"It amazes me how few salesmen actually know how to run a successful business. Some can't even understand a simple model of a good business. Well, maybe they just refused to try to understand. People often discount quickly that which they can't understand."
I've developed a thick skin. Otherwise, I'd be pretty insulted by a lot of this discussion. Perhaps we need to start figuring out ways to get rid of everybody else's profession because of the poor job done by others. Maybe we need to eliminate the entire departments of Labor, Agriculture and Education because we all know how lazy most bureaucrats are don't we?
Our dealership experimented with this back in 1992. We posted the bottom line price on every car in the lot. When a customer asked if the price was flexible, we responded, "No sir. We believe in treating all of our customers the same way and that is with the highest level of customer satisfaction possible. We believe our prices are fair and honest and we would love to have your business." At which point, the customers wrote the number down and drove to our competitors to beat it by $100. That plan lasted exactly 3 months.
I'm not being condescending and I'm certainly not bullying you. I asked you,and even used the word "please", not to address me. You and I are clearly not on the same plane of thought.
Back to the Ranger deal - At $8,400, we were $2,250 back of invoice including rebate (to the customer). On a truck that costs (invoice) $10,650, how on Earth could a dealer be making another $2,000????????
This goes to show how unreasonable your line of thinking is and how unreasonable some consumers are. You've got a NEW truck that MSRP'd at $11,550. Invoice is $10,650. We sold it for $8,400, losing money intentionally, and you think there's another 2 grand on the table??
I give up, and again I ask that you not address me in your posts.
to comment on anything under this topic and that includes any comments you make, true or exaggerated.
This is all hypothetical and has nothing to do with your actual deal but the dealer could be making another $2000 if you count dealer holdback and other rebates from the manufacturer to the dealer. I thought the idea was to maximize profits here. Why would you even offer to sell one at a loss? Maybe you just want to avoid the future cost of having it on your lot and that is understandable. You will have a VERY difficult time convincing any buyer in todays "mistrust of car dealers" environment that you are losing money on a deal.
Say you own a carlot. What is the biggest limitation that you have? Floor space. Cars take lots of room. Trucks take more. If a vehicle won't sell for at least 4 months, how much is it costing the dealership?? Well, lets say that the average car/truck sells w/in a month of arrival(i know, not all, but lets just assume) thats 4 cars I can show/sell while that truck sits there. It would only take a profit of roughly 200 on each of them just to break even. Consider that the dealership also pays interest on the car/truck while it sits there. It does make sense. Why do you think that you see so many ad's that are "invoice priced" but there are only about 3-4 that qualify for that price?
When I was buying my first "new" car in 1992, one price shopping was all the rage. The car I really wanted was a Saturn SL with only A/C and Radio. Obviously, that was one price. Unfortunately, SL's were back-orded by 6 weeks, and my car was dead. The SL-1, equipped the way I wanted was 12,000, which was a little too much for me. I was working with F & I, but we could not make it happen, so I went to leave (and buy a Ford Escort for $9500). As I was leaving, the sales manager came up to me and asked what he could do to change my mind. I said I can't afford your car...if you drop the price, or get me a base model today, I would buy it.
Well, he came back with....what will it take you to buy the car today...I told him. Then, he proceded to trash the Escort.
(BTW, before the escort bashers chime in, my Escort ran trouble free for 75K miles untill I traded it in).
Does that mean that the "cost of floorspace and average interest" is included in the invoice price? I know there is a lot fee included, does that count interest for staying there a certain average period of time? How long does the lot fee assume it will be on the lot? If that's not included, then how could he sell at invoice and still make money? Would it be accurate to say that he has to get rid of it within about 6 months or he will have eaten up all of the dealer holdback in interest and floorspace costs?
When I was buying my first "new" car in 1992, one price shopping was all the rage. The car I really wanted was a Saturn SL with only A/C and Radio. Obviously, that was one price. Unfortunately, SL's were back-orded by 6 weeks, and my car was dead. The SL-1, equipped the way I wanted was 12,000, which was a little too much for me. I was working with F & I, but we could not make it happen, so I went to leave (and buy a Ford Escort for $9500). As I was leaving, the sales manager came up to me and asked what he could do to change my mind. I said I can't afford your car...if you drop the price, or get me a base model today, I would buy it.
Well, he came back with....what will it take you to buy the car today...I told him. Then, he proceded to trash the Escort.
(BTW, before the escort bashers chime in, my Escort ran trouble free for 75K miles untill I traded it in).
That's what holdback is for, but it only lasts (in that account where it's placed) for 60-90 days. After that, there's a daily note on the car as long as it stays.
You don't make much at all selling at invoice, especially on a vehicle that has been on the lot for a while.
There will always be old age units on the lot. The only way to justify selling one at net cost or less is so that particular unit won't cost the dealer any MORE $$ than it already has, but if you are in a high volume dealership most of the time the old units are the rare ones like convertables or the LOADED units where there is a limited market. And odds are they will hold them for the "holdback period" then mark them down to a not so limited price range. Dealer invoice is what it is for a reason. Dealers do actually pay holdback in the front,then get compensated later, but floor plan is what it is designed to pay. Granted most units don't sit long enough to eat up all the holdback but how much is holdback anyway? In the world of averages holdback is definately not where dealers make their $$.
was that they would let it sit at list price for the term of the floor plan. And I know holdback is a percentage, but so is the interest dealers pay daily, on a 35k unit the holdback is appropriate. Mark up is also a rough percentage 10% as a rule of thumb. Dealer rebates and volume incentives make far more than holdback, not to mention front end gross.
Fortunately, here the people that go to our nearby competitors buy here most of the time because of the EXPERIENCE. like I said before, price is a small factor once you look at the big picture. Really though, how can you stop people from doing the price war thing if they have their mind set on it? I know they won't buy if you won't give them a price.
I was an F&I Director at two stores and I never lied to anyone.
Since bigorange wants to dig up trash from some guy (I know Jeff Ostroff) who couldn't sell cars worth a flip so he has to ruin it for everyone who sells cars because they're auto enthusiasts and like selling stuff, people here will call the next F&I man they see a "liar".
I have had or known of friends or relatives that have had at least 3 of these scams used on them. Is he making up the others? My father had the VIN# window etching done on him. He threatened to walk out because they were going to charge him $500 for it. When he threatened to walk out, they said "how about $300?". Before it was over, he paid $5 for the ethcing? I've also had a friend lied to about their credit rating and another was hit with the "dealer prep" scam.
The VIN etching thing IS NOT a "scam" until someone lies about it.
"Dealer Prep" is ridiculous - all dealers are paid by the manufacturer to inspect and prepare the vehicle for delivery/stock.
VIN etching is a profit maker when used properly. It costs next to nothing and if you buy it, you're not buying the etching, you're buying the insurance policy that goes along with it. I never agreed with it, but was required to make the sales pitch. When I was told "no" by a customer, it came off the contract.
If you look at the archives, you'll find "Car Dealer Dirty Secrets" - a topic I started over a year ago, explaining things like loaded payments and others.
The article you posted is typical of car guys who can't sell, so they try to slam every dealer in the nation, which is wrong. There are a bunch of good dealers out there, and a small percent of bad ones gives everyone a bad name.
The topic I started gives insight on some of the bad ones.
I dod take exception, though, to Mr. Ostroff's referral to the F&I guy as the "Lie-nance" manager - sure, some F&I guys lie - so do 5% of ALL Americans.
Uh...B.O., let me break this down to you in simpler math terms. There are a percentage of people out there who pay sticker, or above, when they buy a car. To some, it is a status symbol, to others it is poor planning or research on their part. Now, before you get all indignant, keep in mind that occasionally cars are sold below invoice. Usually it is to stop the bleeding on an aged unit, someone trying to meet a target number for a bonus, whatever. The majority of people are somewhere near invoice, or a few hundred over.
You can't condition the customer to accept one price. Sorry, can't be done. You can talk all you want about Saturn and Carmax, but its not a valid business model. The majority (there's that word again) of customers don't go for it, and this isn't mother Russia. If you will listen to those around you who are in the business, you will see that it has been tried and doesn't work.
Now, like I said, if you want to be the supreme ruler, buy a dealership and try it yourself, and please stick around and tell us how it goes.
that SOME car dealers/salemen lie and that this article has truth in it. You say that 5% of the population lies. That's a very low estimate. Whatever the estimate is, the car dealers/salesmen are generally thought by the bulk of the American population to have significantly more liars than other professions. I agree that the bad ones give the good ones a bad name although we probably disagree on the balance of the 2 types.
Comments
I accept that it will not change in my lifetime, but I lament the fact that something so wanted(i.e. a car) is in the hands of people who are notorious for being unethical and deceitful to their buying public.
The only problem I see is that very, very few dealers can survive without teeth. The old sayings about running with wolves and swimming with sharks come to mind.
For me, I lust, I drive, I take my time, I evaluate...and if I pay an extra $500 out the door, I can deal with it...but I am not gonna be the fish that win's my salesperson "cheat of the month."
This is just another sad regurgitation of the "inconsiderate seller/buyer" arguments. No such thing as an inconsiderate BUYER...if no one spends a buck at your store, you lose a job and go back to making tacos. Then again, most salespeople have a tough road to ride...the precept that all dealers are dishonest will burn the psyche of most people quick enough, either they will sink (honesty gets in the way of profits) or learn to swim (growing their own teeth to fend off the other predators).
Customers...well, most just want a simple exchange. Fair price, fair trade, and good service. It seems simple, and then you realize that no person likes to feel like they left a dollar on the table, either theirs or the other guy.
If I turn a deal that is $500 better than average, that is my grift...if the dealer turns me for $500 over the TMV...that is his. Somewhere in the middle is the real price...and no one is willing to believe it anymore. A person shouldn't have to spend a month reading and researching and driving cars to make a decision...but if he is smart...he will do just that.
OK...I am off my soapbox.
Also, this concept of "dealers having to agree" was not part of the idea either.
You haven't made sense YET. This wonderful Disney-type atmosphere that you're talking about couldn't exist for more than a day or two simply because consumers can always beat a price somewhere with a little work.
When dealer A advertises a car at $21,500 and dealer B has the same car at $21,300, dealer A has to lower their prices to remain in business - that's very simple. Then the horserace begins of which dealer can cut themselves lower in order to attract customers AND stay in business, which is exactly the same situation as we have now.
What you're implying is a novel idea, but just like retail clothing stores, prices aren't always fixed, there's always a sale of some sort and Wal-Mart has the item cheaper than Target, or vice versa.
So, to sit back with one price posted on your sign, you can expect your business to drop off immediately as soon as folks figure they can get it cheaper somewhere else. When that happens, you HAVE to change your strategy to stay alive, pay the bills, pay the employees, etc.
What I'm saying is that your idea, while a great one for folks who want an easy buying experience (realistically only 10% of the buying public), won't work in the real world.
I'll give you an example. In Wyoming, coming up on Winter, we had a two wheel drive Ford Ranger (new) on the lot. It had been there 6 months already, and there was no way it was going to sell between October and April, so we needed to get rid of it. We sold it with a $250 spiff to the lucky salesman, and $500 below holdback - $750 below the holdback mark on invoice - holdback was another $500 or so, so we were selling the truck at $1250 BELOW invoice.
A kid and his folks came in looking at the truck (it was in the paper at this low price) because the kid was going to college in CA, so the 2WD would work for him. We showed the folks the ad price, plus TT&L and they got mad. We pulled the invoice and I used the calculator to show them what we were selling the truck for (net price was $8,400). THEY WANTED TO SWITCH TO ANOTHER TRUCK SO THEY COULD "DICKER". THEY DIDN'T WANT TO BUY A TRUCK UNLESS THEY COULD NEGOTIATE - PERIOD. They walked, but came back a few days later after 2-3 phone calls from me and we made the deal.
You figured they didn't believe me?
Let's understand something - I haven't lied to you or anyone else and if you claim I have, then you're the one not being honest - I don't appreciate it and you should stop immediately.
You're a lost cause. They believed the invoice just fine and they should, since it's a violation of federal law to misrepresent something like that.
I don't appreciate the insinuation that I would manipulate the price or invoice. You may have been lied to by some car dude in your past, but it certainly wasn't me.
People WANT to negotiate - everybody, in some way, wants to negotiate. That's how our Dads and uncles trained us.
I know what they were thinking because they told me what they were thinking - I didn't have to guess. After 10 years as a cop, I can certainly detect when someone's telling the truth or full of fluff.
You insinuated I/the dealership lied during several statements in your posts. I don't like being associated with liars, I don't like it being insinuated that I'm lying, especially by someone who doesn't know me and certainly doesn't know anything about retail.
Please don't address me in your posts again.
1) It seems to me that there is a difference in stating that some customers will automatically distrust a car salesman, than in implying that a particular salesman lies. I think the former is frequently true regardless of the actual salesman, and can see why a particular salesman might feel defensive.
2) The discussion about pricing and profits is instructive. Where information is freely available, "invoice price" and MSRP are less relevant. The question becomes, "what did the dealer actually pay for this vehicle, including any incentives and holdbacks". It seems to me, that saying I'm selling at 2% over invoice (when you are also making an additional 2% on holdback) is technically honest, but only because terms of art are in use. Some on this site may know more than I do about car buyers, but on business people generally and on lawyers my experience is as good as any. I'll tell you, the care used in car language is no different than the kind of lawyers quibble that business folk complain about daily. It is honest, but it sure isn't clear. To me holdback, and dealer incentives are cost savings, no more, no less. What people avoid discussing, is what you think a competitive profit and/or profit margin are on a car sale.
3) The more people undestand about where the money flows are in the new car business, the more uncomfortable they become. I have read the same studies about people liking to haggle, but I take it with a grain of salt. My feeling is that fewer people would haggle (they would still comparison shop for a lower price) if the same standards for measuring cost and profit were used everywhere.
You may ask, "why should a dealer be forced to disclose every cost advantage he has?". And you would be right, all dealers would make less money because margins would come down universally. On the other hand, as information becomes universally available on pricing, and on vehicles, one wonders why we have middlemen (dealers) at all. Why not just a factory owned test drive center?
A good deal does not leave me feeling bad about myself, either that I payed too much, or that I had to deal with sleeze. For example, last summer, I bought a Sienna at a very good price. However, at F & I, I had a huge hassle. And, I felt like I was being jerked around. The sales person also (tried) to make me feel guilty about the price. It was not a good deal.
Same van for the same price at another dealer may have been a good deal.
Point taken on the Yugo and I agree dealing with sleaze is completely. Either is enough reason to switch maker or dealer. But for the same vehicle between dealers who are reasonably civil, I'd still rather pay less.
Bigorange,
Re service: I guess do what we do now. As I understand it, service is treated as a distinct profit center anyway. So there could be factory service. Or, and I am grossly ignorant here, why not independent shops (if certification is rigorous, equipment is standardized, and parts are factory). I'd rather have the manufacturer spent money on a strict monitoring program.
I mean, even my BMW dealer orders parts from a central distribution warehouse now. Every good service department I know complains about the time it takes to source and train good mechanics. Wouldn't some premium service centers be a great idea -- factory owned or not.
As to test drive centers, BMW, Lexus, M-B have been Ok. They actually have demo cars in all models. But, others, (including in my own experience -Toyota, Saburu,Linoln and Chevy) demo new cars off the lot. I don't know about you, but I believe in a break in period and I like to do it myself, gently. With test drive centers, where the demo cars were not being sold as new, you should get to a better test drive, without worrying about the break in period for the poor jerk who actually buys the car. I like to buy cars with under 10 miles, and I try to drive non?dedicated demos very carefully.
As in most situations, a business sets its prices based on the market conditions. The majority of customers like to haggle, thus the pricing is set up that way. There are avenues for those who don't like to haggle- buying clubs, internet departments, etc. Why should a dealership structure itself to please 1% of its customers, which represent the smallest profit margin?
The only businesses that could operate under your scenario would be congress or the post office.
Ed
abtseller,
Yes, as is currently set up, dealers have a contractual arrangement with the manufacturer which, of course, could not be nullified. We are merely speculating that it would be nice if dealerships were factory owned. Query how long it would take for contracts to expire or for dealers to be bought out. Also, there may well be antitrust issues with factory owned dealerships. I would submit, however, that conditions existing when these antitrust rules were drafted have altered considerably. Consumers, given much competition between brands, might do better if the middleman's commission were eliminated. I'd even be happy if dealers stay where they are and we "few" non?hagglers and internet buyers could buy direct from the factory.
Ed
the fact that the loudest and sleaziest dealers sell the most cars hurts the professional way of selling the most. If consumers would avoid these types of dealerships things would change,...but as long as yelling and acreaming sells cars there isnt a reason to change....It's hard to complain about results that work very well!!
I don't advocate sleazy dealerships....but they are nearly impossible to compete agaisnt.
Let's say I own a Ford dealership and I have 1 Taurus loaded with options and my price is $25,251. If Joe comes in, that's what he pays. If mary comes in, that's what she pays. If Larry comes in, that's what he pays. Larry may say, "I can get a Taurus with all the same options at Joe Schmoes for $24,900." Then you say, "Please go to Joe Schmoes and buy it then."
Then say,
"It amazes me how few salesmen actually know how to run a successful business. Some can't even understand a simple model of a good business. Well, maybe they just refused to try to understand. People often discount quickly that which they can't understand."
????????
Back to the Ranger deal - At $8,400, we were $2,250 back of invoice including rebate (to the customer). On a truck that costs (invoice) $10,650, how on Earth could a dealer be making another $2,000????????
This goes to show how unreasonable your line of thinking is and how unreasonable some consumers are. You've got a NEW truck that MSRP'd at $11,550. Invoice is $10,650. We sold it for $8,400, losing money intentionally, and you think there's another 2 grand on the table??
I give up, and again I ask that you not address me in your posts.
This is all hypothetical and has nothing to do with your actual deal but the dealer could be making another $2000 if you count dealer holdback and other rebates from the manufacturer to the dealer. I thought the idea was to maximize profits here. Why would you even offer to sell one at a loss? Maybe you just want to avoid the future cost of having it on your lot and that is understandable. You will have a VERY difficult time convincing any buyer in todays "mistrust of car dealers" environment that you are losing money on a deal.
BO - you can say anything you want, just leave me out of it. I don't want my name associated with you.
Say you own a carlot. What is the biggest limitation that you have? Floor space. Cars take lots of room. Trucks take more. If a vehicle won't sell for at least 4 months, how much is it costing the dealership?? Well, lets say that the average car/truck sells w/in a month of arrival(i know, not all, but lets just assume) thats 4 cars I can show/sell while that truck sits there. It would only take a profit of roughly 200 on each of them just to break even. Consider that the dealership also pays interest on the car/truck while it sits there. It does make sense. Why do you think that you see so many ad's that are "invoice priced" but there are only about 3-4 that qualify for that price?
Well, he came back with....what will it take you to buy the car today...I told him. Then, he proceded to trash the Escort.
(BTW, before the escort bashers chime in, my Escort ran trouble free for 75K miles untill I traded it in).
Well, he came back with....what will it take you to buy the car today...I told him. Then, he proceded to trash the Escort.
(BTW, before the escort bashers chime in, my Escort ran trouble free for 75K miles untill I traded it in).
You don't make much at all selling at invoice, especially on a vehicle that has been on the lot for a while.
No dealer would intentionally "hold" a vehicle through its holdback period because that is a guaranteed way to lose money.
Zues: If you're going to address me, don't expect me to do the opposite.
these things sell today at ~10k (the one-price underlying the "one price").
gotta love American ingenuity.
got a firetrap on your hands?
car too expensive for its market?
water down the plastic and kill two birds with one stone.
Since bigorange wants to dig up trash from some guy (I know Jeff Ostroff) who couldn't sell cars worth a flip so he has to ruin it for everyone who sells cars because they're auto enthusiasts and like selling stuff, people here will call the next F&I man they see a "liar".
bigorange - what do you do for a living?
BTW: I am an engineer.
"Dealer Prep" is ridiculous - all dealers are paid by the manufacturer to inspect and prepare the vehicle for delivery/stock.
VIN etching is a profit maker when used properly. It costs next to nothing and if you buy it, you're not buying the etching, you're buying the insurance policy that goes along with it. I never agreed with it, but was required to make the sales pitch. When I was told "no" by a customer, it came off the contract.
If you look at the archives, you'll find "Car Dealer Dirty Secrets" - a topic I started over a year ago, explaining things like loaded payments and others.
The article you posted is typical of car guys who can't sell, so they try to slam every dealer in the nation, which is wrong. There are a bunch of good dealers out there, and a small percent of bad ones gives everyone a bad name.
The topic I started gives insight on some of the bad ones.
I dod take exception, though, to Mr. Ostroff's referral to the F&I guy as the "Lie-nance" manager - sure, some F&I guys lie - so do 5% of ALL Americans.
whew...glad that is over.
Uh...B.O., let me break this down to you in simpler math terms. There are a percentage of people out there who pay sticker, or above, when they buy a car. To some, it is a status symbol, to others it is poor planning or research on their part. Now, before you get all indignant, keep in mind that occasionally cars are sold below invoice. Usually it is to stop the bleeding on an aged unit, someone trying to meet a target number for a bonus, whatever. The majority of people are somewhere near invoice, or a few hundred over.
You can't condition the customer to accept one price. Sorry, can't be done. You can talk all you want about Saturn and Carmax, but its not a valid business model. The majority (there's that word again) of customers don't go for it, and this isn't mother Russia. If you will listen to those around you who are in the business, you will see that it has been tried and doesn't work.
Now, like I said, if you want to be the supreme ruler, buy a dealership and try it yourself, and please stick around and tell us how it goes.
Ed
You say that 5% of the population lies.
Yeah, but that's the selection criteria for car salesman. You can tell they're lying because their lips are moving.