Stories from the Sales Frontlines

tidester · July 2007

i hope someone is keeping track

Apparently, you are! I nominate you as our official unfinished story tracker.

tidester, host
SUVs and Smart Shopper

snakeweasel · July 2007

The closest model I can think of to the direct sale nirvana is euro delivery.

What about Chevy's National Corvette Museum Delivery? Would that be any different and if so how?

epiney · July 2007

I've got news for you.
Most dealers make more on Euro delivery cars than they do on in stock units.
We LOVE Euro delivery.
No negotiation,no floorplan,instant profit.

When I looked at it, Euro delivery prices were no better than well negotiated prices and in many cases worse, except for maybe BMW. I've heard Mercedes dealers get a flat admin fee for the transaction. Same with Volvo?

imidazol97 · July 2007

>so far:
mackabee - 1 story unfinished
british rover - 1 story unfinished

Thanks thenebean for keeping their ~~feet~~ keyboards to the fire to get those stories finished in between 6 sales a day.

stickguy · July 2007

Not surprised Max. No overhead = more profit! I was just using Euro delivery as the closest thing I could think of to manufacturer direct sales. You are effectively serving as the order taking Kiosk in this case.

I always figured that dealers would do real well on ordered cars (thinking doemstics here). Just take the order, and deliver the car. No floorplan for for 6 months, no jockying it around the lot, etc. Just a quick in and out.

stickguy · July 2007

Now you have to add LRguy for owing 1 installment too!

joe131 · July 2007

museum delivery costs more.

im_brentwood · July 2007

Not on all of em

Some of the much newer cars, yes. Older cars? Oh no... E36s? E39s? E38s? E46s? Generally every 30k. E46 M3s also require valve adjustments every 15k like all solid lifter motorsport engines.

Irrespective, the service indicator theoretically should dictate servicing requirements... save oil services, it's realistic on Inspection intervals.

They went to the 60k Inspection 2 intervals around 99 on a lot of cars, the difference is, NOTHING changed on most of those cars! Don't even get me started on BMW's planned self-destruction, I mean new maintinence schedules.

Now, I must get back to stuffing this S52 into an E34....

Bill

im_brentwood · July 2007

Retailing the cars at invoice is not profitable.

Truth is, it costs, on average, about a grand in overhead to sell a new car. Period. Average invoice nationwide is probably $23,000. The average car sits for 60 days to sell, $400+ in floorplan. Comissions, insurance, turning on the lights, security, detail department, title clerks, offices to hold paperwork, fedex fees for sending forms to the Mfr, ad nauseum.... it does add up.

I have seen very few stores that make a NET profit off of the new car dept. Now.. parts and service?? Ahhh...

im_brentwood · July 2007

E46s ought to have oil services every 6k on synthetic as well.

I have a sludged to hell M52TU sitting here that got 15k oil services for about 140k miles... until it lost its' head.

Also, if you own E46s, by 5 years of age or 75k miles, you'd have better replaced that cooling system.. especially the t-stat and ESPECIALLY the expansion tank. M52TUs and M54s don't like to get hot, they basically self-destruct... and a blown expansion tank can give very little warning, the car could be badly overheating and you might not even realize it!

Timeserting one of those blocks is NOT cheap, I've done it!

im_brentwood · July 2007

Another nice thing about ED.. it usually does not eat into your allocation. OTOH, it doesn't always help you build your allocation either.

joe131 · July 2007

Every once in a while, a dealership sells a new car for WAY less than their costs. It is a big money loser if you just look at the price it sold for. Nothing wrong with that. It's great if you happen to be in the right place (the buyer's chair) when it does.

snakeweasel · July 2007

While true IIRC it does include a few extras. But my question was how does it differ from european deliveries where the dealership takes an order and you pick it up at the factory in Europe?

dino001 · July 2007

Retailing the cars at invoice is not profitable.

You didn't understand me. We talked about manufacturer run stores. Invoice is in fact the price they currently sell the cars to the dealers (I know - minus obvious deductions - but lets use it as reference point here - for the sake of argument, OK?), so it is supposed to be profitable to them, at least when they have a healthy business model, cost structure, and product that does not stink.

Now - all I meant is - if they assumed retail (which again - I'm not all for at all - I'm just trying to get things straight here), all they need is add the retailing costs and std. markup to get the price.

Volvomax argues that their retailing costs will the same or perhaps even be higher as those of current independent dealers, thus list prices will remain the same. All I'm saying is I'm not so sure about that. Lets just look at dealer regional overlap in dealer network. Five Cadillac stores in Tampa Bay, I can't even count Chevy or Ford stores - they just open a new huge one of the latter couple of years ago like we didn't have enough :sick:

They could conceivably consolidate store coverage much farther (read eliminate overlapping stores), thus also reducing costs of competing local advertising (no five different Chevy stores commercials in half hour claiming all having lowest price in the area). They could also organize distribution centers different way as well. These are all real synergies that could be eliminated. In ideal world they could increase profits and keep the list price. However, with decent competition between brands, they may be forced to pass those savings (if any) to the consumer - thus possible drop of MSRP. But again - I think drawbacks of mfr-run stores are much higher than possible benefits. I just do not like blank dismissals, that's all.

thenebean · July 2007

ok, so...

mackabee - 1
british - 1
lrguy - 1

geez...im gonna get all these stories confused! :P

-thene

bretfraz · July 2007

Just wanted to say, WB, Bill. I'm happy to hear you're feeling better and things are getting back on track for you.

madmanmoo · July 2007

Yesterday one of our top guys was talking to the receptionist with his back turned to the door. I was working a deal in the manager's office and saw an older couple pull up.

I quietly skirted by the salesman and greeted this nice looking older couple. I caught him slipping.

Today I'm in to finish up the.....

More later.

-Moo

user777 · July 2007

i think this story fragmentation is very interesting, but it would be a tad more interesting if each poster had multiple stories which were started and left incomplete at the same time. :shades:

anyway, at least you guys are posting stories, and we aren't arguing about buyer vs. seller tactics, motives, responsibilites, etc.

mackabee · July 2007

"Yes, what do you want to do.?" asked Mrs. Johnson. "I want to take a look at your trade in, show you exactly what we'll give you for it and also what you can buy the van for. That way you can go home and have all the information in front of you." So I bring them inside and ask for their keys to the trade. I go out and look at it and Mr. J. was right. This thing may bring a grand at the auction if we're lucky. The vehicle is trashed. Looks like the last time it was cleaned was when Roosevelt won the election!

I write down the mileage and VIN and get back in to write the appraisal. I take the keys to the used car manager and he goes and looks at it. He comes back and says "That car is trashed! I didn't even want to get in it."
The UCM puts $800.00 on the trade. I take it over to the new car manager and explain the situation. I want to make a quick deal so I can move on to the next one. I hit them at $500.00 over invoice, $1500.00 rebate and show them $1000.00 for their trade. They both look at the worksheet and Mrs. Johnson says she doesn't know what she's looking at. I explain it line by line and tell her it's a great deal and can we wrap it up today. "I want to sit down with my son-in-law and see what he thinks." ......to be continued.. :shades:
Mackabee

thenebean · July 2007

well aren't you just a wiseguy! :P

mackabee - is it just me, or do the parts to your stories get shorter and shorter each time? eventually you'll give us a sentence, and then "to be continued..."

-thene

mackabee · July 2007

I then try a sympathy close. "Mr. and Mrs. Johnson. I feel bad as I feel I didn't do my job." I say. "What do you mean?" asks Mrs. Johnson. "Well, If I would have done my job you would be driving away in your new Sienna right now." I reply. "Oh no! You were great!. It's just a lot to digest. I want to decide whether I want the leather or not." she says. "You don't need the leather!" interjects Mr. Johnson. "Anyway, we are going to buy the van and we are going to buy it from you. I promise." Mrs. Johnson responds. So I go to the new car manager and tell him I couldn't close them today. He tells me to have them take the van overnight. I go back and propose they take the vehicle and they decline. "Oh no. We are going to have so many people at the house this weekend so the last thing I need is for them to trash my van." she says. "I'll call you tomorrow and let you know what I decide."
So I walk them out to their trade and say goodbye for the day.
To be continued.

Mackabee

kyfdx · July 2007

.. So, I..

to be continued..

user777 · July 2007

and now, another wonderful installment of the hit saga: "as the key turns".

:mad: :surprise: :shades:

geffen · July 2007

We want more story

joel0622 · July 2007

I agree 100% BW, for the average New Car Dealership all the new does is get you a sign in the front yard and the service business. Profit comes from the fixed ops in parts and service and the used car department. New car sales are just a necessary evil.

dino001 · July 2007

New car sales are just a necessary evil

So why don't you guys give it up to manufacturers and focus on service and used cars

Just kidding, couldn't resist.

lrguy44 · July 2007

For all the reasons previously posted, they do not want it and can't afford it.

dino001 · July 2007

And you are just for them to take away all that terrible burden. And of course you (or precisely - the owners) do it from goodness of heart.

cotmc · July 2007

I think we should start a pool:

1) Do the Johnson's buy or not?
2) If they buy, do they get the leather seats?
3) How many parts (posts) does it take mack to complete this story?

Here's my entry:
1) Yes
2) No
3) 14

volvomax · July 2007

Yup, a nice flat!
Better than we can make selling cars at the dealer.

psorter · July 2007

"So standard markup would likely be lower than now. Conclusion? One price (sticker), but lower than today's."

A similar but maybe more practical business model would be to only offer a very limited selection of models for sale like this(cloth auto Camry LE, for example). No test drive, no service, no options available, then they could offer a lower price. A lot a people buy cars like refrigerators, so they would like this.

A regular dealership would still exist for more traditional sales and service.

volvomax · July 2007

Guess what?
No stores would be eliminated.
Becasue the mfg's wouldn't want anyone to have to drive out of their way to buy a car.
Consumers want dealers that are close to their home or work.
Also, people want to see the cars they are buying.
So,each store would have to carry the same number of cars.
What part of no benefit is so hard to understand?

dino001 · July 2007

That is only your guess - somewhat convenient to agree with your current staked livelihood.

As is mine that you are incorrect - and let's stay at that diagreement.

lrguy44 · July 2007

I would still have a job - still need to sell a car. But the economics do not work - have you not read all the post deliniating why they do not want nor can they afford to do it? :confuse:

asafonov · July 2007

We want more story

All your story are belong to us... or something.

carhag2000 · July 2007

It's right on the window sticker."

NICE!!!

I always have a quaint little saying that I gove to customers that are asking for a discount on a new CRV. " Honda was nice enough to put the price of this one right one the window."
You may or may not be surprised but most folks just giggle at this and we move on in our negotiations.

dino001 · July 2007

Allright - they don't want it, I don't want it, you don't want it. All I say the Earth would not stop spinning and the consumer world would probably not come to an end if they actually did it. In competitive economy there are enough pressures and incentives to search and exploit synergies and savings, regardless how distributions channels are organized - and there are some significant ones in current system, even if it actually is the best that humanity has ever conceived.

nortsr1 · July 2007

pproductive as to the most sales? Memorial Day, 4th of July, Labor day, end of year holidays, and I guess I missed a couple of the others....or is it when the mfg. starts one of those big incentive deals such as Employee pricing???

lrguy44 · July 2007

If any of us could figure this business out we would be retired and living on a private island!

[Deleted User] · July 2007

Hey lrguy! I'm sure you're familiar with the Schomp dealerships here in town. They've been a no-haggle dealership since we bought our first Honda in 98 and they don't seem to do a lot of advertising but seem to still do good business. I know GO (formerly Elway) was a no-haggle but not any longer. Do you think Schomp stays in business primarily from service/parts or do they cover just enough profit from their one price strategy to keep afloat? Just curious what someone in the biz would have to say about them. We almost bought an Accord from them over the weekend, but their price was $1300 higher than what I was able to get just over the phone...

lrguy44 · July 2007

Everything I have heard and know about the dealership is excellent. They survive by treating people right. As far as GO is concerned, it is still AutoNation, same as when Elway's name (and it was name only - he sold all his stock long ago and worked on a personal services contract) was on the door. I would say do what you gotta do, but as a matter of loyalty, I would take your better deal to Schomp and see what they say. Either way, you need to do what is best for you.

volvomax · July 2007

That is only your guess - somewhat convenient to agree with your current staked livelihood.

As is mine that you are incorrect - and let's stay at that diagreement.

As I said before,it wouldn't impact me, I'd just go to work for the motor co.

However, I have over 16 yrs experience in the auto business,and that experience is what leads me to the conclusions that I have laid out.
So, feel free to believe whatever you want to,it doesn't matter

greanpea68 · July 2007

3) 14
.
I tink you mean catorc :P e

greanpea68 · July 2007

If any of us could figure this business out we would be retired and living on a private island!

LMAO!!!

british_rover · July 2007

I think we make a profit on the new car side after all the quarterly bonuses are paid out and business builder is factored in but only JUST barely.

epiney · July 2007

Hey Moo and greenpea, no wonder you guys have been so busy. Those Altima sales have gone crazy! Up 76% year over year. Versa and Sentra strong as well.

Lrguy and BR, what's up with the LR3? Doesn't seem to be doing so well. LR2 cannibalizing sales?

madmanmoo · July 2007

You know, I was just looking over all the sold vehicles from my almost 4 years in the business. Guess how many Quests I sold??

In the 3 recorded years at the Nissan dealership I have 463 sold cars. Of those 463 cars, 6 were Quests. ROFL!!!!!

I was cracking up at work over that one.

-Moo

jescue · July 2007

Well thats more than my combined total of 9-2x and 9-7x sales. :surprise:

volvomax · July 2007

We turn a profit on the new car side.
It isn't near what service and parts do.
Most Lux dealers turn profit on the new car side.
Most mass marketers lose money on the n/c side.

british_rover · July 2007

Oh yeah the new car side profit is measure in small single digits while service and parts is SUBSTANTIALLY more.

I was just looking over Fords sales for the yeah and month.

Lincoln is the only brand positive for the year. Land Rover and Lincoln are positive for the month of June. Land Rover is basically flat for the year, down 0.1 percent, although I expect sales to go positive again by the fall.

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