The problem is the dealership sales model vs the retail sales model. Too bad the dealership lobby is so strong, or we'd all be buying cars the way those who can afford Tesla's do.
The problem is the dealership sales model vs the retail sales model. Too bad the dealership lobby is so strong, or we'd all be buying cars the way those who can afford Tesla's do.
MazdaFace
You sound like a decent person in a bad industry. I was there myself a long time ago, selling stuff door to door (offices, not home) and had someone tell me I was worse than a used car salesman because I came to their office. I quit not soon after that and never looked back. Sales like that teach you a lot, but I'd hate to see you disgruntled and frustrated in the next few years. My advice is to look for a different type of sales environment if you can.
Dealing with car dealers is two pronged, and both are rusted and covered with disease.
Car dealers have screwed over customers for years. With hidden fees and markups, screwy financing, shady deals in general, etc. They prey on customers with aplomb because that's what they're forced to do by management. Plus, as you know, the margins are so thin, they have to be that way to make a living. It's sad that the commission on a new car can be less than $100. 10% seems fair, but you'll never see it. It's the way dealerships have run for 100 years and it'll be a LONG time before it changes, although it's getting better.
On the other hand, because dealers have done that for years, most people are either pissed off before they go in (expecting to get screwed) or made to feel stupid afterwards because of the volume of people telling them they go screwed. A car is probably the second largest purchase someone will make (a house being first) and the whole system is designed around confusion. Companies like CarMax are what most people would prefer to use, and something I've done on the past few cars I've bought, but even on this very board I'm told how I was screwed and overpaid. Personally, I don't care as I know it'll be a decent car (nothing "hidden" from a individual seller) and don't feel pressured to buy. Even with companies like that or with new car dealers that try to match them, customers have so much outside pressure that they're going to get screwed they cave into the pressure and make it difficult. "You only got the dealer to knock $3000 off the car? You must be stupid. I know they'll cut the price in half. You must not have tried and just paid too much attention to the monthly payment. I feel sorry for you." <--Think about how that would make someone feel.
Personally, I'd like to see cars start selling like most other things we buy. The price on the car is the price you pay (ala CarMax). No discounts, no invoice pricing, MSRP or nothing. Salespeople paid per car (nothing based on percent). High pressure sales would reduce (not go away), hidden fees and things like "paint protection" would fade away. In theory. Saturn tried it, but it didn't work because the buying public was brainwashed into the "You're getting screwed" mentality. I'll bet that at least 50% of the people on this very board would never pay MSRP for a car because they can't avoid the feeling of getting screwed if they did.
But, it'll be a VERY long time before it happens, if it ever does, because it's a long an vicious cycle that feeds on itself and has existed for way too long. Personally, I think you'll see people using shared autonomous cars before we see dealers change.
I'll say again, you sound like a decent guy in a bad industry. I'm willing to bet you'd be more successful and happier in an industry that rewards ethical sales and building long term customers.
-Rob
In reply to rob_lewis :
The first new car I bought was a Saturn, in '95. The last used car I was involved in buying (girlfriend's) was at Carmax, last June. There have been a handful of other new and used dealership car purchases between them, but those two stick out as the best experiences.
In reply to rob_lewis :
That's what the majority of my family/friends have told me. "Decent person in a bad industry". But like you said, even when a good deal is a good deal, if its that easy people seem to think they are getting screwed. I try to get people cars at what I would call a fair price/market value. That doesn't mean as cheap as possible, it means a fair price. I would never disagree that we have earned the reputation we have, but it does make it frustrating when you don't fit that mold. Different car companies take different approaches. Companies like ford and GM can offer 10-12k off sticker and still make a profit because of how they are priced (high MSRP vs low MSRP, etc...). But when people expect that kind of discount on a 25k car, they seem genuinely offended when I tell them that its simply not possible. Bottom line, I make zero money if you don't buy a car. So if there is a way to make it happen, I'm going to make it happen.
My good friend wanted to get an FR-S when they first came out. Went to his local Scion dealership and they had two but they were both automatic and neither was the color he wanted. Got talking to the saleswoman and kept trying to tell her that he wanted one in Asphalt with a 6-speed manual. Finally the she got exasperated with him and told him that she didn't get why he was hung up on the manual transmission, the automatic was the same car. He then stood up and loudly proclaimed "This woman is an idiot and I want a new salesperson." Someone else instantly ran over and got him his 6-speed Asphalt FR-S
Suprf1y said:mazdeuce - Seth said:Part of the reason I haven't bought a turbo Transit van is because I don't want to deal with the emotional stress of dealing with a dealer about ordering one.
It's a business deal. The emotional component serves no purpose and the dealer doesn't control that, you do.
I would disagree. With the cars I buy it's absolutely an emotional experience. If it was just business I'd shoot for a Camry or an Accord blindly on price and wouldn't care which I ended up with. I do though. I care about which car I end up with.
I've had several friends sell cars. All young guys, all stepped out of the industry after 2-5 years and all of them willingly took lower paying jobs when they did. To a man they had the same story. The people that did really well weren't passionate about the product, they were good at identifying "targets" (which is what they called them) and exploiting them. People that were clearly anxious, people with small children who were fussy, people who they could identify at being poor at math once they talked to them, people who were emotionally involved in the purchase. The salesmen who did the best identified these people and made more money off of them. I've heard it argued that that's the game, but it's a E36 M3ty game. Finding a single mother a good car, sending her back to financing and having that guy come out gloating because he upsold her on $2k worth of useless stuff? Having your manager insist that you sell the car to the old couple for more because they're nice and aren't going to threaten to walk out? And then they have to get up the next day and try to poach the most vulnerable customers before the other guys on the floor get to them. They all walked away in disgust. It wasn't an industry that rewarded hard work and honesty.
Having said that, I've had a couple of good dealership experiences, but the bad has outnumbered the good enough times that my expectation is that a salesman, and especially the finance guy don't want to sell me a car as much as they want to identify my weaknesses and exploit them while selling me a car. It's hard for that to be fun.
I feel like the only decent car sales jobs are in CarMax, because they're a bit different from the usual dealerships. Too bad CarMax only sells used cars, they'd make a killing if they sold new cars without any of the BS.
In reply to MazdaFace :
And I want to thank you for being in the industry and being an enthusiast and a good person. It's a genuine joy buying cars from good people, it really is.
In reply to mazdeuce - Seth :
That's how I feel too. I don't relish the "game" like others here do. I just want to get the car for whatever the median price is and get the berkeley out. A couple hundred bucks in one direction or the other is the cost of that.
I don't think I've ever bought a car and spent under 3 hours in the dealership. I haven't been car shopping in a few years but I drive the MS3 to pick up parts for both the X-Terra and it every now and again. The sales guys that come running up and ask about the car I always get a card from because they're the types I generally want to do business with. That way I can refer other people or call them if I were suddenly in the market.
In reply to MazdaFace :
Get into industrial sales. Near any large refinery or chemical plants? If so, there are a few companies selling to them.
Better hours, better commissions, better customers. Contact me if interested.
mazdeuce - Seth said:
..my expectation is that a salesman, and especially the finance guy don't want to sell me a car as much as they want to identify my weaknesses and exploit them while selling me a car.
If you're talking to the dealer's finance guy longer than it takes to get a yes or no answer to the question of "Here are my pre-approved financing terms; can you beat them?", you have not prepared yourself adequately to make this purchasing decision.
MazdaFace said:The idea that we make a "fat commission" is always so frustrating. More often than not, I spend hours working to find someone the car they want (with them fighting me the entire time, convinced that I'm trying to berkeley them over), at a price they can afford, so that I can MAYBE come away with enough money to pay my car insurance. Now if you are buying something special, like a GT350 or a Raptor, or some other limited production type car, then yea there really isn't any haggling and I'll take home a fat commission. But if you come in and buy a corolla at sticker price, I'll be lucky to come away with $150 before taxes. I will say on pre-owned stuff the mark up is different and depending on what we got it for, I can come away with some money. At the end of the day, I'm not an shiny happy person here to berkeley you over. I'm just a normal person with bills to pay just like everyone else. Literally had a customer tell me "if you weren't so greedy about your paycheck we might be able to make a car deal happen". Oh gee sir yea sorry I'm so greedy over my $100 commission check. Of course I realize in this industry I am probably the minority, but so be it. I think the idea of ordering someone the perfect vehicle (even better if its an enthusiast ordering something neat) is pretty freakin cool. /endrant
Thanks for that. It’s good for you to explain that to those that may not have known it. My buddy was a salesmen for a used dealership and we had the exact same discussion. You can’t blame the sales guy, the manager, or the brand. You can, however, blame the sicko that owns the dealership and set up all the hoops for everyone to jump through to purchase/sell a car.
Someone should open a dealership where there isn’t any BS. Make it just like a grocery store, inside the grocery store is an independently operated bank giving loans. And that bank rents the space from the dealer. That way, if the bank starts causing bad PR, you boot em. Keep in mind, I am not a business savvy person. Just a simple farm boy.
There is a dealership in the Annapolis area that has embraced the CarMax method for their sales teams, both new and used vehicles. I have to admit, it was disconcerting enough that I missed a decent buy. Someone got themselves a very nice example of the Mazda 2 before I got back to the dealer (Fitzgerald Mazda)...
Suprf1y said:mazdeuce - Seth said:Part of the reason I haven't bought a turbo Transit van is because I don't want to deal with the emotional stress of dealing with a dealer about ordering one.
It's a business deal. The emotional component serves no purpose and the dealer doesn't control that, you do.
You show me a single business deal that doesn't involve emotion and I'll wager it's an automated one between software packages. There's no way to remove emotion from a deal and the bigger the deal (which is relative for the people involved) the more readily emotions come into play.
In reply to Trackmouse :
That's essentially CarMax for slightly used cars/trucks and that's also how Saturn used to work before they imploded due to having bad products foisted on them.
The difference is that the banks aren't onsite, but they work closely with them, but you really should show up with your own financing or money.
Do a little research on the legislation around car makers and their dealers and you'll understand why some of the problems exist in the first place.
Trackmouse said:Someone should open a dealership where there isn’t any BS. Make it just like a grocery store, inside the grocery store is an independently operated bank giving loans. And that bank rents the space from the dealer. That way, if the bank starts causing bad PR, you boot em. Keep in mind, I am not a business savvy person. Just a simple farm boy.
Isn't that basically what GM tried to do with Saturn way back in the early 90's?
This might be worth reading again:
http://www.naltblackchurch.com/finance/pdf/ConfessionsOfACarSalesman.pdf
I specifically ordered the Arctic Blue Sport Wagon!!
There are multiple problems with a fixed price model. In Saturn's case, the Ion was also available as a Cobalt or G5 at a lot that would deal, so you could get a better price on essentially the same car. The other problem is that demand is not able to be perfectly determined. If a manufacturer could know that every car they make could be sold at a fixed price, I suspect they'd lobby to get rid of franchise dealers. As long as manufacturers cannot be certain of what will and won't sell, the price will have to be variable. They could discount as demand falls, but then everyone will know they could get a better price later, and a lot of people would just hold out in the hopes of a better deal, only instead of negotiating for it, they just play a waiting game (as long as they don't need a car immediately).
I'd prefer not messing around with negotiating, and have no problem with the salesman making money, but I don't want to be the guy they really ripped off, so I have to negotiate for a better deal, and it may mean the salesman gets a E36 M3ty commission. The system is rigged against honesty and openness.
What I'd like to know from any salesmen here, since the the dealer tends to screw them as well, are any of them willing to surreptitiously take, say $200 and unofficially become a buyer's agent, working to get the best deal possible for the buyer? I'm sure if they got caught, they'd lose their job, but curious to see if they'd take the risk. Or if they'd just claim they're helping and use the money to further pad their commission?
In reply to eastsideTim :
I think I see your point, but it doesn't seem insurmountable. Fixed doesn't have to mean etched in stone, just that cars might be like more retail goods, few of which have demand perfectly defined. Sold for a given price, discounted when next year's models are getting close. A change in how things are done may see some fumbles in the short term, but manufacturers would get numbers for the cycle, see how many people hold out for last year's model cheap vs how many are going to buy a car when they need a car, etc... Anyhow, I suppose the technical viability of change is academic until the folks lobbying for the status quo can be reined in a bit.
eastsideTim said:There are multiple problems with a fixed price model. In Saturn's case, the Ion was also available as a Cobalt or G5 at a lot that would deal, so you could get a better price on essentially the same car. The other problem is that demand is not able to be perfectly determined. If a manufacturer could know that every car they make could be sold at a fixed price, I suspect they'd lobby to get rid of franchise dealers. As long as manufacturers cannot be certain of what will and won't sell, the price will have to be variable. They could discount as demand falls, but then everyone will know they could get a better price later, and a lot of people would just hold out in the hopes of a better deal, only instead of negotiating for it, they just play a waiting game (as long as they don't need a car immediately).
You mean, operate exactly like every other retail manufacturer/business in this country?
Driven5 said:eastsideTim said:There are multiple problems with a fixed price model. In Saturn's case, the Ion was also available as a Cobalt or G5 at a lot that would deal, so you could get a better price on essentially the same car. The other problem is that demand is not able to be perfectly determined. If a manufacturer could know that every car they make could be sold at a fixed price, I suspect they'd lobby to get rid of franchise dealers. As long as manufacturers cannot be certain of what will and won't sell, the price will have to be variable. They could discount as demand falls, but then everyone will know they could get a better price later, and a lot of people would just hold out in the hopes of a better deal, only instead of negotiating for it, they just play a waiting game (as long as they don't need a car immediately).
You mean, exactly like every other retail manufacturer/business in this country?
The difference is car/truck buyers have a lot more incentive to hold out and save more money versus, say someone buying a $2.50 bottle of shampoo.
eastsideTim said:Driven5 said:eastsideTim said:There are multiple problems with a fixed price model. In Saturn's case, the Ion was also available as a Cobalt or G5 at a lot that would deal, so you could get a better price on essentially the same car. The other problem is that demand is not able to be perfectly determined. If a manufacturer could know that every car they make could be sold at a fixed price, I suspect they'd lobby to get rid of franchise dealers. As long as manufacturers cannot be certain of what will and won't sell, the price will have to be variable. They could discount as demand falls, but then everyone will know they could get a better price later, and a lot of people would just hold out in the hopes of a better deal, only instead of negotiating for it, they just play a waiting game (as long as they don't need a car immediately).
You mean, exactly like every other retail manufacturer/business in this country?
The difference is car/truck buyers have a lot more incentive to hold out and save more money versus, say someone buying a $2.50 bottle of shampoo.
Which is absolutely no different than it is right now...Buy the all new trendy designer car that was just released, and you're going to pay full price or more. Wait a year (or less) and you'll pay much less for the exact same car as it goes 'on sale'. Leftover 2017's are on 'clearance' right now, while any deals you can get on 2018's are nowhere near as good. But if you have the time to wait until March, and you'll start getting better deals on 2018's than you can get now.
In reply to Driven5 :
Valid point. And that is evidence the manufacturers will already work that way, as most of that money is from manufacturer incentives. Of course, if incentives become predictable enough, the rational consumer will always wait until they cna be reasonably assured of the largest discount. Not that car buyers are rational.
I think regional variances in demand would also have to be taken into account. Some models just sell better in some places than others. They'd need to determine if it's worth it to just have a regional discount to clear out excess cars, or spend the money to shift inventory hundreds or thousands of miles across the country, in order to maintain equal pricing.
Of course, manufacturers could go to the idea of having a few demonstrators on the lot, and have almost everything be custom ordered. Too many other things would have to change for that to be a viable system, at least in the US. At the very least, it'd require getting rid of the current dealer system, and could severely mess up just-in-time manufacturing.
eastsideTim said:In reply to Driven5 :
Valid point. And that is evidence the manufacturers will already work that way, as most of that money is from manufacturer incentives. Of course, if incentives become predictable enough, the rational consumer will always wait until they cna be reasonably assured of the largest discount. Not that car buyers are rational.
I think regional variances in demand would also have to be taken into account. Some models just sell better in some places than others. They'd need to determine if it's worth it to just have a regional discount to clear out excess cars, or spend the money to shift inventory hundreds or thousands of miles across the country, in order to maintain equal pricing.
Of course, manufacturers could go to the idea of having a few demonstrators on the lot, and have almost everything be custom ordered. Too many other things would have to change for that to be a viable system, at least in the US. At the very least, it'd require getting rid of the current dealer system, and could severely mess up just-in-time manufacturing.
Ever been in a Tesla "showroom" ?
This is essentially how it works. They have a couple of demo models open to view, sit in, etc. and you can schedule test drives. Along the walls they have the various materials you can have on yours and will walk you through ordering what you want.
Car manufacturers could work towards an "on demand" style of production and alleviate many issues that buyers are struggling with at the expense of the entire structure that is in place that provides a lot of jobs for people.
In reply to eastsideTim :
I think a lot of the problem is people have unrealistic ideas of what's fair, or just won't admit that they made up in their head what is "fair". Basically I run into a lot of people who think a fair price for a certain model is what they can afford. Example would be someone who has 35k to spend, but wants the 42k trim level. Instead of asking for a deal on the model they can afford (and saving some money in the process), they demand that we discount the 42k trim level down to their budget. As far as taking a payment from a buyer to make sure they are getting the best deal possible, in theory it sounds great but most people would just assume the sales person is still screwing them over. The fixed price idea sounds great but like GM found out with saturn, no one actually wants to do that when its put in front of them.
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