A car salesman's worst enemy is a buyer who is well informed and educated, not only on the car and pricing but also on the buying process. I used this website, which was outstanding for understanding everything you need to know when buying a car. It even contains a spreadsheet to help you really understand what the true cost of the car is to the dealer, which many times is below invoice. It is amazing how each dealer I spoke with tried to use the same tricks that are described on this site. Link I now enjoy going to a dealer and negotiating a car deal, it has become very entertaining and quite amusing listening to dealers try and pull things over on you and then calling them out. As far as putting money down when you are going to finance the car. I put at least 20% down since I don't want to be upside down on the car when I leave the lot, i.e., after depreciation, you owe more on the car then what it is worth.
I don't mind the "fighting chance" customers. They just are not repeat buyers, and thus not helpful for my continuing career. And frequently, they are more trouble than they are worth. I'll let the store down the street spend 5 days trying to get that customer into the store, while I am selling my repeat customers and referrals. My customers are among the most educated buyers (it is a well regarded brand). I respect them. They've researched KBB and edmunds and even called around to get a few quotes. They already know what a good reasonable deal is, and that is what they offer me. Minimal time involved (usually an hour) for both of us, and they give me perfect surveys every time. I give them outstanding service, and they give me referrals. This is what the car business should be. People should enjoy buying cars instead of dreading the process. It's usually an emotional purchase. I've helped people get their very first cars, and I've helped seniors who've let me know that they expect this to be their last purchase. It's an absolute pleasure on my end when they drive off smiling and thanking me for such a smooth process.
It's a fact that the top 3 moneymakers for the car dealership are. IN THIS ORDER.. 1) Car financing. 2) Warranties 3) Sale of cars. They know that with no down payment... you can't get into as much of a car. (example... 10k down & now you can get up to a 40k car) 0 down and you are stuck at a 20k car or less)
OC, I wouldn't necessarily put them in that order. For subprime borrowers, there is good profit in the financing. However, well qualified buyers are frequently getting superlow interest rates as incentives. For my brand, we actually get charged $100-$200 per deal from the manufacturer if the customer qualifies for this rate. Hot selling cars and preowned vehicles do offer good profit. Cars in high supply and lower demand do not. It all averages out.
I agree with you, Eurohorn. I wish that stereotype of us didn't exist, but it's there for a reason. If a salesperson uses lines like that, please go find a better salesperson instead. The extras do have value, but at many dealerships they are way overpriced. $895 for paint and fabric protection? $195 for a pinstripe? Ridiculous numbers, but people still buy it. I've actually seen a competitor's sticker from a Dallas store that charges for a Tire pressure monitoring service feature that came standard on the car. There are good ethical dealerships out there (mine is not the only one). Please give the good dealerships your business, so that the other stores will have to change their ways. They only pull these stunts because they work.
I have to say I've seen a world of difference between massive dealerships focusing on mid-level domestic brands (e.g. a ford or chevy dealership), and a Lexus or MB dealership. I use the same salesman at Northside Lexus, and I've now bought 3 cars through him. I'd say on average I am paying him about $1,500 per car in dealer profit. They don't try to upsell me anything in the finance office (assuming I finance with them, which I don't unless they have a promotional rate). He's a good guy and I don't mind paying some profit. Northside does have outstanding service after the sale, and I don't exactly want to never be able to set foot in the place again because I negotiated like a prick over $500.00. MB was similar, although I did get tired of the "this is an MB, f**k you if you don't want it" attitude. Problem is for my particular they were absolutely right, as demand outstripped supply in a big way (at that time, anyway). However, I also used to represent several dealerships in La Porte and East Texas, and I am well aware of the outright fraud that goes on the "special finance" section. The crap they pull on lower socio-economic classes is disgusting, and it is pretty much an epidemic. Just as a side-bar, I am currently prosecuting a state-wide class action (not in Texas, of course) relating to the practice of adding a $995 charge for a "protection package." In actuality this means "car wash." Discovery has shown in the this case the premium dealers didn't utilize the practice, while the mid-tier ones did. Obviously they work at lower premiums and have gotten very creative in increasing their profit margins. I think buying through the fleet/internet guy is fine and there isn't anything wrong with it, I personally prefer to deal with a consistent point of contact for convenience and so I have some stature there if something goes awry that may or may not be under warranty. I also like it because I fight with people for a living, and I don't particularly want to have to do it on my own time.
Once you adjust the price of the car for all the holdbacks, unnecessary fees, etc, paying 3-5% on the actual cost is reasonable and should be enough to get the deal done. The key is identifying and adjusting out all the nonsense baked into the sticker price.
Euro - once you decide what you want, it's a commodity product. the differentiating should be done in your test-drive and research phase of the process. once you are ready to negotiate you should have decided on the model you want. at that point, there's no difference other than price.
Very few people make buying decisions solely based on the lowest price or the best deal. I can understand the salesman's point of view --if you're in sales why wouldn't you want to deal with people who value customer service and the entire buying experience over the "give me your best deal or I'll walk" customer? Especially when the former will refer you future business and you'll never see the price hunter again. True hapiness as a salesperson comes when you can say "Fine. BYE!!" to the price hunter and not need that business...
Euro - you're right about the jet engine, wrong about the house, taco, and most other things. A 4WD White Ford Explorer with tan leather interior is the exact same no matter what dealership you go to. Houses are all different. A 4/2 is not a 4/2 is not a 4/2. Same with tacos. They may have the same ingredients, but that doesn't make them the same. Cars aren't like that. They are assembly line products and don't vary between dealers. Thus, what's the "value" in the customer service if the salesman already admits that you can get the lowest price without actually having to deal with the customer service people? I can certainly see it from the salesperson's perspective...but wouldn't all salespeople like customers who don't hold their feet to the fire and will just swallow a deal if you do a little dance for them? Sure would be an easy job.
Johnny M, if Ford Explorers were the entire auto market then it would be a commodity. However, you can also buy Hondas, Toyotas, Chevys, etc.. That is the auto market and there is diffentiation in those products in terms of quality and performance of the vehicle. All I am saying is that you are using the word "commodity" loosely and if you went up to anyone and said, a car is a commodity, most people would debate that. It's is almost like saying all animals are dogs and then turning around and qualifying, if they have four legs, two ears, a tail, etc., etc.. Again, I understand your point that you are making I just wouldn't say a car is a commodity. On the spectrum of a commodity vs. differentiated product, I think it is closer to a commodity, but not one in the true sense of the word.
Euro - first of all, a "commodity" doesn't have to be a uniform object across the entire market. secondly, why is this an issue? my point is this...you shouldn't negotiate without knowing exactly what you want. once you know exactly what you want, the salesperson is unnecessary and you should get the lowest price possible, since the customer service on the sales side does not add value to your transaction.
actually no a commodity when it comes to the stock market is that. a commodity, by definition, is a product rather than a service. you're right, you could narrow any market down and say something is a commodity. what's your point? you could also go the other way and then nothing is a commodity. shopping for a specific make/model is commodity shopping. shopping for a vehicle isn't. i never said it was. i have said over and over that the negotiation phase should only start once you know your desired make/model (incl. options)...why do you have such a hard-on for this? shopping for a corn futures is commodity shopping. shopping for a crop isn't...get it? you still have to narrow that market as well.
No hard-on here, just a hard head there. Here is a typical defintiion of a commodity "A physical good that is bought and sold based solely on its price, rather than quality and features. Examples include coffee, cocoa, grain, cotton, metals, and oil. These goods are generally traded on as futures contracts" link You choose a car based on quality and features you want an then you go for price. Therfore it is not a commodity.
that's the typical definition of a commodity in stock-market type of situations. it's not the only definition of commodity. your head is just as hard, my friend. is corn futures not a contract that is bought and sold on the commodity market? i understand that CORN is the product, i was just using that contract as an example since i was reading an article today that talked of corn futures, etc. i guess my UT Finance degree on my wall cannot compare to your vast f'ing array of knowledge. jesus ******* christ. put away your commodity fetish and focus on my ******* point. read NAIU's post again, it's exactly what i was trying to get at.
First off, if anybody didn't read the 'Confessions of a car salesman' article that TXHookEm linked they really need to do so. Fascinating & insightful.And to the two car salesmen who are bitching about having to deal w/ knowledgeable consumers who are "wasting" the time of dealership employees...cry me a river. You can throw away the email & fax quote request from customers because you don't want to waste your time, but all you've done is thrown away business. The fact is the internet is eroding away the business of the dinosaur sales guys who want to catch their ups as soon as they walk on the lot, take them on a demo, get them back in their cube & then work their 4-squares BS for hours as they send in different managers so they can screw the uneducated consumer out of thousands of dollars they don't have to spend I bought my new car in February doing internet research & requesting quotes online from the internet sales managers. Six different dealerships submitted quotes to me. In the end I had the two dealerships lowering their offers to earn my business. Four of the initial quotes were right @ invoice. One was $300 under, another was $100 over. When it was all said & done we purchased the exact vehicle we wanted for $450 under invoice & the dealership obviously made an acceptable profit. Total time "wasted"? Maybe 6 hours, not including my initial online research. Most of the time that was wasted was ours, not the dealers. One salesman kept me waiting almost 30 minutes for the test drive we'd scheduled via their website (10AM on a Sat...minimal lot traffic). The same guy wasted another 20 minutes when I came back to get a price quote (they were the only one out of 6 that would not provide pricing info; you had to be in their office). Didn't buy from them. Then the GSM and Finance Managers @ the dealership we eventually bought from wasted about 2 hours total of our time as we were finalizing our deal. The GSM went so far as to say he wouldn't drive the 30 additional miles we were willing to in order to save the extra $200, that he always bought locally. This was after they'd called us back & told us to bring our best price (which I'd already given them via email & Thurs. & repeated on the phone that Saturday) & that they would beat it. The GSM went back in his office to "look at numbers" for an additional 5 minutes but when he saw us stand up & my wife grab her purse he came running out & miraculously told us that they'd take a "pounding" but he'd do it because they said they would. The final wasted time was the F&I guy trying to nickel & dime us w/ extended warranties, "platinum service packages', gap insurance (yes, he offered us gap insurance on a vehicle we were putting 40% down). I added everything up during his pitch & if we'd taken the max of all he offered out payment would have literally doubled. So to the car sales people out there, get with the program. Your model doesn't work very well anymore. I'll continue to buy cars this way in the future. There's no benefit to me or any consumer to have my time wasted by a dealer who is only trying to take money out of my pocket when I can quickly & easily get the vehicle I want at the price I want to pay.
See that's the thing, to me , the point of a sales man is to sell something and to make money. No problem there, but when MOST of these sales men use deceptive and dishonest tactics to make money then it become a problem. The only way that a consumer has a chance in these situations is to educate themselves and to use tools like Fighting Chance. I'm sorry but a industry that has a deserved reputation as being dishonest and taking advantage of the less educated you are not going to get much sympathy. This is in no way an indictment on any individual but rather the profession in general. But hey, I'm sure that all of you car salesmen love to pay higher prices for the cars that they purchase.
Actually, other car salesman make the best customers. They call me and say "I see you've got 20 or so (of a particular model and trim level) on the lot. Give me "reasonable trade value" for mine and $500 over invoice for yours and I'll buy right now. Me: "That'll work. When can you be here?" That's it. And they'll buy another car from me 3-5 years later. Out of respect for each other, we don't put each other through the grinder. We know what a fair deal is, and that's all that we're asking when we buy cars ourselves.
