Wednesday, September 15, 2010

Just Cuz I Sell Cars For a Living Doesn't Make Me an Asshole

Well, I’ve been toiling away now for 10 months now. I’ve had a few good months and I’ve had a few crappy months. I’ve met some real nice folks and I’ve met some jerks.

The dealership where I work is in an upscale community in San Diego County. Good credit and good income is the norm. We also get a number of Marines from nearby Camp Pendleton, usually with pretty good credit too. And all that helps. What doesn’t help though is the cynicism, smugness and sense of entitlement that all too many customers bring with them usually because they’ve managed to look something up on the internet.

The internet actually does a lot of disservice in many areas not the least of which is in car sales. Just because it’s on the internet doesn’t make it the gospel. Just because it’s on the internet doesn’t eliminate the need to read all the fine print.

Anyway, this hopefully isn’t going to degenerate into a rant. But let’s see what flows from my brain to my fingertips.

There’s a lot of down time at a dealership. And there’s times when you’re desperate for something to keep you busy. And, it doesn’t help when the dealer filters all but the most basic of websites from its computers. Forget search engines or news sources.

So here’s a couple of things from a car sales guy that might help you a bit the next time you think you want to take the plunge and go shopping for a car:

Narrow your choices of a new car down before venturing out. Have a pretty good idea whether you want a cross-over utility vehicle, sedan or mini-van before venturing out. All major manufacturers have websites where you can screen various models and trim levels and do your basic comparison shopping before leaving home. Remember, if I don’t sell anything, I don’t make anything. I’m patient but not to the point where I’m happy to spend 2 hours with you doing nothing but “kicking tires” on your first foray to a car dealership in 10 years.

Are you thinking of trading your car? That’s fantastic. And if you want to withhold it until the end, that’s fine too. But bear in mind that now isn’t the time to get impatient over time because it’s now going to take 30 or more minutes longer when we have to appraise your vehicle and if a balance is owed we have to contact the lender to secure an accurate 10 day pay-off. (The sum of your remaining payments is not your payoff unless you have a 0% loan).

And, the amount you owe on your trade has absolutely nothing to do with how much it’s worth. A customer a couple of weeks ago was incensed that we couldn’t provide her with a trade value that would pay off her vehicle. She owed $8500 on an 8 year old vehicle that was worth $5000 at wholesale. I finally asked her a direct question: “Miss, if you only owed $1000 on your car would that mean that it’s only worth $1000?” Of course, she answered “No”. To which I responded, “Well, wouldn’t you agree then that the amount you owe on your vehicle has nothing to do with how much it’s worth?” Of course it doesn’t.

If you’ve already ground us down to a below invoice price on your vehicle, you have no expectation of a “retail” value on your trade. We’ll go wholesale to wholesale or retail to retail. The dealer where I work rarely tries to go retail for our car and wholesale for a trade (but we will). It’s lousy business for us to go wholesale on the vehicle we’re selling and retail on the vehicle the customer is trading. We won’t do it and will tell a customer right up front that we can’t and don’t.
Here’s a hint. The sources of trade information online are generally woefully inaccurate. The closest we’ve found is The source we try to use most is a source that only dealers have access to. It’s known as Manheim Market Reports and is the commodity based pricing from Manheim Auctions, the largest used vehicle auction company in the nation. The prices we get from there are the amounts that used car managers from dealerships have actually paid for specific vehicles. That’s a commodity price and represents real money paid for a car as close to “just like yours” as we can get.

You know, I’m an old fashioned customer service kind of guy. I’ve never held with the notion that selling cars needs to be a confrontational exercise where it’s all about putting another number up on the board for unit count and maximizing my commission on each sale. And the dealership where I work reflects that approach as well.

But if I don’t sell, I don’t earn. We earn a percentage of the gross profit on each vehicle sold. On new cars the minimum is $200. But there’s less profit than that on most new vehicles. Many have no profit or even a loss. It’s a simple matter of trying to put units over the curb and on the road. The profit center of a car dealership is in its “fixed operations” department (a fancy term for parts and service). And the only way that department gets customers is for us to actually sell a car.
Forget stuff about “holdback”, etc. That is indeed money that the manufacturer provides back to the dealer to help offset expenses—like the light bill or the property taxes or fixed salary expenses or even the interest on the loan the dealer takes to finance the inventory.

Sometimes we will dip into it to close a sale. That’s because increasingly customers demand that we compete against the other dealerships which sell the same brand as we do when it comes to price. We are required by customers to shave prices incrementally with the one most willing to whittle down the price winning. Imagine selling a $30,000 vehicle because you beat the guy selling the identical vehicle 20 miles down the road by $50. It happens all the time and it’s absolutely exasperating.

I earn about 1/3 of what I earned a couple of years ago as an automotive industry consultant. The benefit is that I have reduced my business travel from 150 nights a year in a hotel to 0. That’s worth it.

I love the customers I work with, by and large but the bottom line is that I’m a professional and just because I sell cars for a living doesn’t make me an asshole.


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