This is a repost from the salesman and commission thread, but I think it deserves to stand alone. Very interesting (if somewhat long) read.

Edmunds Article

 

I have read this article many times. I have all of my new salespeople read it because I want them to know what our customers will be seeing. They need to know that they will not be liked or given trust. The need to know that the have to earn these things.

I also have a few problems with the article. This guy only spent a short time at these dealerships. Not enough to really understand anything- good or bad. HE only tried 2 places, both in the same market. He did not cover all types of dealers either. Some dealers are best price or pure price type stores, some work 4-square (the first delaership), others work price and trade.
We work price and trade on non-Scion vehicles. We do not show some paytment using "Stupid-High" numbers. Nobody goes over any type of payment until the customer has agreed on a price and goes tot he finance dept. We feel that this is less confusing to the customer, and they also will know how much they are buying our car for. The payment will be whatever it will be, but at least the price is not hidden. Because of this I have been shown that we actually make less per car than dealers that use the 4-square method. Seems to me that this way is better for the customer and the dealer. Customer saves money, and we get very high CSI (customer satisfaction index) scores.

 

When was this article written? It mentions '99 vehicles, but is not dated. Is it really that old?

 

that an awesome article!

 

Great article. I noticed alot of things that the dealers tried on me before I got my scion.

 

What about a high-volume, low pressure dealer? Or a low volume, low pressure dealer? There are so many variables that were left out that this article is not as informative as it should have been. They could have interviewed salespeople that have done this for several years, and from several types of dealerships. They did a good job with what they had, but they left a lot out and still made us look bad. They were not very objective, and it is very one-sided.

 

Is car sales a good field to be in? Is it really possible for a newbie car sales tard to make decent money his first year?

 

I used to play the sales training tapes for the new Salesmen when I worked at a dealership, so I heard all the gimmicks. One is to hold onto the customer's keys. When I was shopping for our Grand Caravan, the Tracy Dodge dealer had a n00b salesman help me out. He kept turning to the seasoned guy for pointers, cues, etc. When he got done checking out my "trade-in", the keys were hanging on his finger under the clipboard. I just reached out and slipped them off his finger and put them back in my pocket. When I started feeling like I was being played, I told my son to load up, we were leaving. The older salesman thought he still had us for a few minutes more and was mad at the n00b for not keeping the keys. The poor guy got a ration as I drove away... hehehe

 

article reminds me of my kid brother trying to make it at the dealership....love that kid

 

Wow what a read...opens the eyes, it does. Thanks for the link.

 

What a great read!

Thanks for posting this

-THE DON

 

It is a very good career, as long as you are honest. There are so many rules to protect consumers, and so many options, that you cannot make it by tricking them or not being honest. When I sell a Toyota, I have no problem showing my customer an invoice, reviewing things like "hold-back, etc., and letting them know exactly how much profit the dealership is making. I made a decnt income 1st year, $10k increase 2nd year, and on the way to another $10k increase this year. I do not lie to peopl, and I can look at myself in the mirror anytime and know that I do a good job.

 

Coupla things...

1. With all due respect to JBHS98, there is no way you will ever know the "profit" on any car you sell. By claiming that you know this and share it with the customer, you are inadvertantly perpetuating the myths of the car business. Profit means how much money is left over at the end of a transaction right? So, to find this out, you take invoice, minus holdback and wholesale finance reserve and the delivery assistance money (you did know about the delivery assistance money right?) You then add back in the costs associated with the car. Those costs include your commission, your manager's commission, average advertising expenses, average floorplan expenses, utilities, taxes, interest, salaries of the office staff and a bunch of other crap that only the comptroller of your dealership knows about. Then, and only then, do you know what your "profit" is on a car.

What you are sharing with the customer is only half the equasion and that, by itself is pretty meaningless. The other half of the equation isn't really the consumer's business anyway, nor is how much money is made or lost on a deal. By claiming you know what "cost" is, just empowers the customer to start arguing about stuff that isn't their concern.

The more accurate way to describe invoice is to tell the customer that invoice is simply the amount the dealer pays to get a car onto their lot. It is not cost. It is a relative number that the consumer can use to compare different cars at different dealers and know if the number they are being given is competitive in the marketplace. For instance, "$100 over invoice" at one store is "$100 over invoice" at another store. by knowing this, the customer can decide if $100 over invoice is good, bad or the same as everywhere else.

2. This "confessions" web site has been around for quite some time. Is this the site where he gives you a formula for getting your best deal by writting a letter to the "manager"? The letter I'm referring to is the one that states, "I have not been to your dealership and have not spoken to any salesman. Therefore, this is a "house" deal. I would prefer to buy from your store and will be servicing my car there. I will be paying cash and will not need in-house financing. Blah blah blah. I know similarly prepared consumers are paying less than invoice. I am sending this to 80 different dealers in the area." If this is the site where this form letter comes from, you need to know how moronic that letter is. There is no such thing as a "house" deal because somebody has to process the car and therefore, somebody gets paid. By telling them you don't need financing is the same as telling them they have no way to make a dollar off you except for the sale of the car itself. It establishes you as a frightened consumer who views lying as a valid negotiation method. We know we will never see you again. If this form letter didn't come from the "confessions" site, I apologize, but I just laugh whenever I see this letter.

 

I understand this, and I do not just pull an invoice out and say, "lookie here". I just meant, if a customer asks, I will show it and not try to hide holdback and finance reserve, etc. If a customer is willing to allow a fair profit, then we can sell a car that way. This does not, however mean that that is the final prifit, because there are too many other thingsthrown in. You are correct, Cliffy, and I appreciate what you have added to my statement. Thank You

 

Ah. Got it. I get very edgy about the word "profit" because it just isn't relevant to the discussion. Every consumer product has a value and that value is set by what people are willing to pay. If the market will not buy a car for $100 over invoice, then its worth less than that. If the market will bear $1000 over invoice, that's its worth. Use invoice is a marker. It marks a common number that both you and your customers can use to figure out if the price you are asking is on par with the price at another dealership. Don't represent it as cost. It just invites a slide down a very slippery slope.

It sounds like you have a pretty good handle on that anyway.

 

Well, crap. What does that tell me, that when I paid cash for my xB, and then went back to the same dealer, and got my xA there, that they were treating me less then honest? That they saw my cash sale as a 'downer'?

Dang it. I knew I should have gone into debt....

 

First of all, the Scions are a completely different ball of wax. Second of all, yes, dealers don't like it when you pay cash. Bragging about it as a way get a better deal on a Toyota is absolutely counter-productive. Even when we don't mark-up the rate, we get a flat fee from the bank for arranging the loan. Also, it is much easier to sell warranties and GAP when we are arranging the financing. By saying you're paying cash, you are saying "whatever money you are going to make from me, it must be on the sale price because there is no chance you'll even get a flat fee or sell me a warranty." Its delusional to think this will somehow get you a better price. There are still a lot of consumer web sites that still don't understand this and their advise makes their readers look ignorant.

 

I would like to add to Cliffy's statement. Many years ago, arranging financing for a customer was a huge hassle for a dealer. It took a lot of work, and the dealer had to wait days, weeks even, to receive the money from the lender. Dealerships rely on a continuous cashflow to be able to pay employees, pay for advertising, purchase new and used cars, etc. Waiting for the money was not a good idea. As a result, they would offer a better price to someone who could pay cash.

Cliffy's statement was very correct. Sometimes a dealer likes if you finance even if they do not get extra money out of it. If you write a check or have your own financing, there can be several days before the dealer has the money in hand. If you finance with the dealer's lenders, the money is available to the dealer much sooner.

 

Bullsh*t. CASH is still CASH. Less paperwork is also involved, so the finance guy gets done sooner.
Even more bullsh*t. You have so much, your eyes are brown. MY dealer bent over backwards to get me the xA I wanted, color I wanted, when I wanted it.
Well, here is one thing that this 'delusional' buyer is pleased to say: I don't have to buy from you.
Tough sh*t that you don't get any extra money; I'm not going to inflate your bottom line at all, if I can. Cars are WAY to f**king expensive as it is. I know that most car dealers don't want to admit this, but frankly, cars should be CHEAPER now, then they were twenty, thirty years ago. Less manpower, for one. More robots being used.
Cheaper materials, cheaper parts...
Someday, I hope, there will be no car dealers at all. We will just go to a place, punch in what we want, and the car comes out to us. We pay for it, and leave.

I really don't like dealers.

 

I think we all got that message.