Stories from the Sales Frontlines

british_rover

It almost always makes more sense to finance a highline car too. There are usually some kind of enhanced leasing programs out there, resale can be suspect depending on a huge variety of factors and if you drive a ton of miles it makes even more sense to lease because the numbers always work out in your favor.

cotmc

"Before the day is over I will have them all either approved or within a couple thousand of being approved."

Sure - Why not?? It's only money! No big deal. Hey, just ask the folks at Countrywide or American Home Mortgage.

When the bottom drops out for these customers, and they decide they cannot pay $600/month for 72 months on a used Prius that is worth only 60% of the loan balance, then what?? After a few months in default, is the car repossessed? I'm assuming Insurance pays the gap difference between ACV and the loan balance? OK. So, what happens if the Insurance company starts taking financial hits? :sick:

Too many customers are, simply put, financial idiots. The banks need to start taking a more conservative approach on these loans, instead of providing $40K loans for $28K MSRP car purchases. :mad:

OK, I'll get off my soapbox now! Thanks for reading!

joel0622

I agree with you to an extent cotmc, like I have said here many times before, it is a joint venture between the banks, the dealer, and the consumer.

The bank to continue to offer it

The dealer for offering it

The consumer for signing it.

But that is the way it is. Who are you or I to dell the Jone's how to spend there money?

I can't quite compare to the Home Loan folks though. At least the rates on these loans be it 0% or 20% are fixed simple interest rates. Not ARM's like the ones in Mortgage Market that has everyone in trouble.

metro123

You all would be amazed if I was to tell you the amount of Neg Equity financed in my office in a weeks time.

Here is just a sample of some of the deals I am working right now.

2005 Chevy Owes $26501 ACV $15000

2002 Ford 0wes $11850 ACV $2500

2005 Honda Owes $22850 ACV $12500

Joel,

I'd be curious to know why these customers are so negative? Was it bad prior deals catching up to them? Was it a poor choice of cars? Or are these trades just beat.

Metro

cole

Did you mean that it almost always makes more sense to lease a highline car? The rest of your post seems to indicate so.

houdini1

Mack, you don't have to explain anything to me. I meant no offense to you, I was just commenting on your clients sad condition.

I have made a good living in sales for 40 years and believe me, anyone who can succeed in sales has my respect!!

im_brentwood

Got ya all beat... couple years back...

1 year old 760Li, 48 month lease, 10k/yr. Guy had close to 40k miles on it, and broke the lease a year early on his 2001 750iL to get into the 03 760Li... added a good $15k in negative equity then.

If memory serves best bid we got was around $60k on the car... and his payoff was around $110,000.

cotmc

Hey Joel,

Actually, I don't blame the dealers in this case, as long as the dealer is presenting several options and disclosing all the key loan terms to the customer.

I realize car loans tend to be a little safer than the sub-prime ARM mortgages given out during the past three years. However, I hate to see banks providing 6-yr loans at over 125% MSRP. It just seems too risky.

Boy, wouldn't that be something if banks started offering variable interest loans on automobile purchases? :surprise: Oh, wait a second... That's what I have now on my BMW. I used an ELOC for that.

british_rover

Well I don't like doing absolutes but yes in general it makes more sense to lease a high line car.

There are exceptions to that like when the car has a bad leasing program and has had strong resale value.

For example the Range Rover sport has a completely raw leasing program with no support from the manufacturer. They lease in the 1,200 or so range for a middle equipped car with no money down for a 62,000 dollar vehicle. That blows a lot of people out of the water as they are used to BMWs and Mercs leasing at 800-900 bucks or so a month in the same price range.

Resale value has been outstanding though. Just a couple of weeks ago I looked at a 2006 Range Rover Sport with 15,000 miles on it. She paid 61,000 for it two years ago and it was worth 46,500. I would have stretched to 47,000 to the deal but it never happened because her Boyfriend queered it.

Only 23 percent of depreciation in two years is very impressive on a highline vehicle like that.

xrunner2

I was at the Honda dealer for service recently and strolled into the showroom. Had done this many times before, but this time was different. Whoever was in charge of the showroom that day "allowed" strong-flavor country and western music to be played over pa speakers and loudly. This dealer is not in a country/western part of county/state.

Seems like background music should be as neutral as possible, but not elevator type, to complement looking/buying experience. After all, customers and potential customers have wide diversity of music tastes and "strong" dose of any particular style will turn people off. Many other businesses, stores, doctor/dentist offices seem to have "just right" music that is soothing/refreshing at best or inoffensive at worst.

cdnpinhead

"Thats a lot of green just to be green. . ."

Well put.

But at least they he can feel superior to the rest of us. What's it called? Oh yeah -- smug. Or maybe it's another word that starts with an s.

british_rover

South Park Hybrid Song

Perfect Storm of Smug

jipster

Who are you or I to d(tell) the Jones's how to spend there (their) money?

I like isell's approach. Try a couple times to talk some financial sense to these people, after that it's on them.

jescue

That is too funny...they are at a toyonda dealership.

british_rover

But of course...

Silly Hybrids don't work in cold weather either so that makes it even funnier in always snowy south park.

joel0622

Ya, I bet people tell him all the time, wow your right lets not trade cars. Lets wait 5 years till its paid off, get a 3 month emergency fund in place, then start saving $350 a month for 5 years then pay cash.

If they had the sense to listen you would not be having the conversation with them in the first place. I council young people on there first purchase and occasionally people I truly feel sorry for. But as soon as I star culling customers because I don't agree with there financial planning is probably the day I get fired. You can't help them, all you have done is postponed the inevitable for possibly a month or two and lost a sale.

jipster

If they had the sense to listen...

I wrote I liked his approach... not that it would work, and these people would take his advice. I imagine the majority of people do not listen, as they are knuckleheads to begin with. Ethically, it's the right thing to do though... if you're into that sort of thing.

mackabee

It's actually a very good deal for them. Go to Toyota.com payment estimator page. An 07 Prius with package 6 retails for around $30k. Using my scenario the payments are very close to $600.00 a month. The one we sold was an 06 with 7200 miles and sold for $26,990.00. The trade allowance was $20,300.00 for both trades. ACV on the Bimmer was 5k and we allowed them 7k. The Exploder ACV was $13,300.00. so the net was -4,737.00, $1000.00 cash down, total financed $34,232.00 they did get gap, an extended service plan and maintenance plan. 75 months at 9.55% with $609.95 per month. Front gross was a whopping! $528.78 back end gross was $2613.00. But like I said, it was my third used vehicle this month and to get to the first level unit bonus there is a three car qualified. So I got that one out of the way.
In other news, I just placed an order for a Scion tC for a customer I found in our service department. His 92 Celica needs a/c work. I showed him the Scion a couple of days ago. He rented one and liked it so much he wants one. This will be the most expensive tC I have ever sold! :shades: For those of you that don't know, the Scions are all one price, they only come one way, (fully equipped, not loaded) at a value price. There's no factory options only accessories. Having said that, he accessorized this car to the nines! We are adding nav, pedestal spoiler, ground effects, fog lights, LED illumination kit, spor pedals, 18 in alloys, (it comes standard with 17's) wheel locks, TRD sport muffler, TRD Carbon fiber engine cover, TRD front strut tie bar, billet oil cap and battery tie down, and alloy wheel locks. Oh, I forgot, also B pillar appliques and door sill enhancements. Total price: $25,782.00 :shades: Will probably see it in 6-8 weeks.

Mackabee

british_rover

Ah I understand that is how you make money on a ONE PRICE Scion...

The markeup on all those accessories plus shop time must be a hefty profit generator.

isellhondas

I guess I've never worried about being fired.

At the end of the day, I have to ask myself if I gave people my best. If they don't want to listen and proceed anyway, I'll be happy to help them.

isellhondas

Country Western music??

I would have RAN out of that place!

A little of that stuff go's a LONG way with me!

joel0622

Ethically, it's the right thing to do though... if you're into that sort of thing

Nice little dig there at the end

british_rover

We try to mix it up in our showroom with music from XM.

Classic, Jazz, I even tried modern Jazz no on gets it but me, classic rock, movie tunes(one of the best stations on XM who doesn't like old movie sound tracks) etc.

mackabee

That's correct. Most customers buy them just as they come, others like to add a lot of stuff. I noticed the younger buyers have a budget so they stick with the basic car. The buyers with more money go crazy with the accessories. This particular customer is a really nice guy. He is handicapped and has a part time job plus social security. If it weren't for the substantial inheretance he just received from his father's estate I wouldn't be writing this. Funny thing is nobody would get close to him because of the way he walks due to his disability. He was looking at the xB in the showroom when I approached him and we began talking. Next thing I'm pulling up a tC for him to drive and he fell for the car on the spot.
Mackabee

mackabee

You think that's bad. A few weeks ago all the cars on the pad in front of the showroom were tuned in to the local Hip-Hop station. Talk about alieniating customers. One of the salespersons asked me since I'm one of the senior salespersons to talk to the GSM about shutting the radios or changing the station. I called the GSM on my cell phone incospicuously so as not to upset the sales force and he came out and turned the radios of. Said it was scaring the customers off.

Mackabee

joel0622

Back in the late 90's the old Mitsubishi dealership here in town used to have rap music blaring all the time on the lot and on the showroom floor. One night I was in a bar and I meant a manager from there here told me they did it to try to keep people from being able to think straight. I had a few beers in me and I told him that was the only way to sell one of those POS was to someone who was not thinking straight. He didn't find it as humorous as I did

british_rover

Ehh The truth hurts and back in the late 90s that was the truth.

joel0622

I took a digital meat thermometer I had in my desk out on the lot today and stuck the point of it down in the asphalt. It read 116.2

It is hurting our business and my yard

british_rover

It was a pleasant 85ish degrees here yesterday. I got stared redoing my front porch since yesterday was my day off.

lrguy44

I was Finance Director at a Audi, Porsche, VW, Mitsu store in the late 90's. We called ourselves the folks that brought you WWII. Anyway, the Mitsu SM decided they might sell one if he gave a (at that time) big screen 25" Mitsu TV with every car purchase. He bought abut 25 TVs. Because Mitsu was such a hot product, we all wound up with a new TV in our house.

british_rover

Ahh I remember you telling me about the folks who brought you WWII but you didn't mention the Mitsi TV story.

That is funny too.

murphydog

Isell,

You still over at the Honda dealer along I-90? Heard you all have a VW thing on the lot? If true l would like to know more.

Sorry for the off topic post here all!

mackabee

You ain't kidding brother! It's been hotter than July around here too. I was on the lot with a customer a few hours ago and sweat was running down my forehead. It's cooling off now and there's a breeze blowing but the temp is still high.
What in the world are you doing with a meat thermometer in your desk? :confuse: Oh, I know. That's to stick your customers and find out when they're done! Doh!
Mackabee

joel0622

That is hillarious.

joel0622

What in the world are you doing with a meat thermometer in your desk? Oh, I know. That's to stick your customers and find out when they're done!

Ha ha ha, every out of work comedian in the country is in the car business

It is a tradition here that I deep fry several turkeys during the holidays. Several times I forgot my thermometer so one of the guys bought me one and told me to leave it in my desk.

isellhondas

One of our lot attendants had XM radio tuned into a VERY hard core Rap station the other day and when I went to deliver the car it was still on that station.

BEWARE of XM Channel 66. Every other word us the "worst imaginable" word you can think of or the "N" word!

I can't believe they can play that crap!

snakeweasel

I imagine the majority of people do not listen,

Hey I have people come to me for advice and a plan to get out of the financial trouble they are in. And then most don't listen. They want a way out of the mess they are in but they don't want to give up the lifestyle that got them there.

snakeweasel

After a few months in default, is the car repossessed? I'm assuming Insurance pays the gap difference between ACV and the loan balance?

IIRC GAP only pays off if there is a loss (theft, accident) and not for a financial transaction (which a repossession is). So the buyer is still responsible for the difference between the ACV and the loan amount.

snakeweasel

At a point, I'll stop and I'll proceed knowing that if we don't sell them a car, they will go somewhere else instead.

When I found myself saying that I decided to get out of sales.

joel0622

You are correct Snake. GAP does not pay in the event of a repo.

Speaking of Repo's. Ya want to know a pretty good sign that a person is going to have troubles making a payment?

When you tell them the payment and due date and the first questions they ask you is does that include the late charge and what is the grace period?

Had it happen on more then one occasion

rlatham

After a few months in default, is the car repossessed?

It's interesting you brought that up...I had a customer a couple days ago who was 30 days late nearly 30 times, 60 days late nearly 15 times, and 90 days late about 10 times...but she still traded the car in to our dealership. How the heck does that happen??? :confuse:

joel0622

Not trying to sound callous or cold blooded but since when did a sales persons job description get financial adviser added to it.

I don't run a spread or ask to see P&L statements and projected income reports. We are here to sell you a car.

If I tell you x+a=z x 72 months it is you the consumers job to tell me if you can afford it.

Don't give me no crap about the dealer playing with the numbers of hoo dooing some one into buying a car. I think my daughter learned multiplication in around the 3rd grade or so. Even if you can't multiply every cell phone I have ever seen has a calculator on it.

Here is the tough formula to figure it out.

payment x term = total payback. 60 month loan at $400 a month is a $24K payback. Compare your payback to the list price of the car, viola.

There our some people we have turned away before, those that seem as though they may be mentally impaired and the drunk fools that come in.

But if you are of sound mind and body and not a first time buyer I am not going to sit in my office and try to convince you not to buy a car.

If people would in this world would spend more time taking responsibility for there own actions and quit trying to find a way to blame it on some one else we would all be allot better off.

cdnpinhead

Next to the Mormon episode (hey, I live in Mesa, AZ), that one is my absolute favourite.

Thanks for the links. I'm about to join the current century & get a cable modem at home so I'll be able to use them. When I'm at work, even with high speed, many things are blocked. Not Edmunds, thank goodness.

british_rover

It is pay subscription radio they can see pretty much whatever they want.

Listen to the howard stern channel or the playboy channel sometime on sirius.

metro123

It's interesting you brought that up...I had a customer a couple days ago who was 30 days late nearly 30 times, 60 days late nearly 15 times, and 90 days late about 10 times...but she still traded the car in to our dealership. How the heck does that happen???

Was she approved and at what rate? What did she buy?

roadburner

We are adding nav, pedestal spoiler, ground effects, fog lights, LED illumination kit, spor pedals, 18 in alloys, (it comes standard with 17's) wheel locks, TRD sport muffler, TRD Carbon fiber engine cover, TRD front strut tie bar, billet oil cap and battery tie down, and alloy wheel locks. Oh, I forgot, also B pillar appliques and door sill enhancements. Total price: $25,782.00

You gotta love all the "Look at me I'm FAST!!!" add-ons. The added weight probably ensures that it will be slower than a plain jane tC. To paraphrase Billy Crystal's Fernando, "Eet ees better to look fast, than to be fast."

british_rover

No problem and get with the 21st century already... :P

jipster

You're right joel. It's not your responsibility to offer financial counseling. Your job is to sell cars... and the consumers job to know what they are buying and how it will effect them financially.

While I don't think anyone has said you should "convince" someone in poor financial shape not to buy a car, it would be... let's say, magnanimous of you to steer said customer to a more affordable vehicle.

Now after an attempt or two to steer said customer to a more financially appropriate vehicle goes ignored, then by all means sell whatever they want to buy.

edited: Not trying to tell you how to do your job, or your way is the wrong way. But, that's the way I'd like to be treated.

snakeweasel

Not trying to sound callous or cold blooded but since when did a sales persons job description get financial adviser added to it.

It doesn't until you start saying things like "I only have the customers best interests at heart" or "I work for the customer".

Now I am not saying you have to be a financial advisor or even know their financial condition. But at times there those you know should be getting into something a bit less expensive. Buying a car many times is an emotional process and many people don't think straight during it.

Now I do agree that people should be responsible for their own actions but that shouldn't be used as an excuse for our own actions. Saying that you did it just because someone else is just justification. Its like the story of the man about to jump off a bridge and another man walking up behind him and pushing. Sure the guy was going to jump but does that make pushing him right?

If you have no problem with this more power to you, but I didn't want that blood on my hands.

joel0622

But at times there those you know should be getting into something a bit less expensive

At times nothing. Try every day. If we sell 10 cars in a day 4 of them are being bought by people who IMO can't afford them.

Little girl tonight, she is the related to an employee here, she makes $1900 a month and $700 child support, her mortgage is $950. She signed up for a $266 payment and was an auto approval at the bank.

IMO can she afford that car? Hell no she can't.

I guess everyone who uses a charge card to buy anything really can't afford it, furniture, tv. Where do stop telling people that basically they are making a stupid purchase because imo you can't afford that sir.