By on February 25, 2009

Over the years TTAC has witnessed many skirmishes in the war between those who support car dealers (mostly car salespeople) and those who oppose car dealers (the rest of the known sentient universe).  It’s time to put this particular argument to rest. Car dealers suck. Here’s why: buyers never know what kind of deal they got.

It really is as simple as that. Sure, there’s anecdotal evidence up the wazoo about pushy, intimidating, lying, cheating, incompetent, scummy salespeople. But here’s a little secret: Mother Theresa could be the salesgal and Gautama Buddha could be the F&I guy for Allah’s Ford Lincoln Mercury dealership and I still wouldn’t trust that I got a good deal.

Between sticker price, invoice price, dealer add-ons, incentives, rebates, discounts, hold backs, various employee/college grad/military/loyalty/your mama cash backs, weekly/monthly/yearly manufacturer-to-dealer quota deals and the other probable dozen or so on-again, off-again programs of which I have no knowledge, trying to make a good deal with a car dealer is a bit like trying to make a good deal with the devil himself.

Even when I think I made out like a bandit there’s always that lingering smell of rotten eggs in the air. And if I think I got a good deal shouldn’t I just be happy? Aren’t dealers entitled to make a profit, too? Absolutely not. Given the choice between thinking I got a good deal and knowing I got a good deal, I’ll take the knowing each time.

Unfortunately, after hearing twenty different price quotes from half a dozen dealers, each one implying it was as good an offer as I could get (until the next one, evidently), the knowing is nigh impossible. And even if the dealer is absolutely, positively, completely, 100%, without-a-doubt losing their shirt on the deal, 1) I’m not going to believe it because over the last hour(s) of sales negotiations you’ve lowered your price more than once so I’m getting the sense that there’s wiggle room, and 2) my concern isn’t whether or not you lose money, but rather that I get a good deal.

Car dealers, are you getting the point here? I don’t care if you don’t make a single red cent. I don’t care if the new salesguy I’m working with hasn’t made his first sale yet or if you go out of business and can’t feed your kids because of that great deal I just got (okay, I actually do care about the kids, but not enough to buy rust-proofing). I want to know I didn’t get ripped of while buying my brand-spanking-new massively depreciating “asset.” That’s it.

And assuming for just one infinitesimally small moment I actually did care if you made a tidy profit, just why exactly would I trust you to determine for me what a fair share of my money in your pocket is? I don’t know what you paid for the car, what it costs you to keep the car on the lot, or what kind of money/bonus you’ll get from the manufacturer when you sell it to me.

I have zero knowledge of your financial situation—except for the fact that you want to maximize your profit on the car you are trying to sell me. Which is absolutely groovy and above board given this wonderful free market society we live in. But don’t expect me to like it when your profit comes from my (non-self imposed) ignorance.

Yes, ignorance. Despite the plethora of pricing information on vehicles available online, there’s absolutely no way for the buyer to be aware of what a car costs you, and thus, what a fair deal for you would be.

A quick aside: while we’re all busy celebrating and abiding by that wonderful capitalist free market system, let’s not look too far behind the curtain at all those laws you passed in your state legislature to make sure that you were the only way I could continue to get my fix on those shiny dollops of addiction we call new cars.

If I never know what kind of a deal I got then I don’t know if I can trust you and if I don’t know if I can trust you then I’m not going to feel comfortable in my dealings with you and if I’m not going to feel comfortable in my dealings with you you’re either going to have to learn to deal with all the negative backlash that’s thrown your way or find a better way to do business and I guarantee you the only thing longer and more painful than this run-on sentence is the truth of said same.

I’m tied to you for new car sales and warranty work and the only ones who want it that way are you. That sucks. You suck. I’m done. We’re done.

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172 Comments on “Editorial: Car Dealers Suck...”


  • avatar
    crc

    That was awesome Marcus. I just bought a new vehicle and everything was fine until I got to that A-hole called the F&I guy. He tried to jam me up for so much extra cash I was about to walk. He was extremely sneaky about it too. In the end though, I got out of there and took him for another $300. Needless to say but I will visit another dealership for warranty work if needed.

  • avatar

    And this is different than any other purchase how?

    I’d much rather buy a car than buy a mattress.

    I push for the best deal as hard as anybody. But as I’ve gotten older, it has gotten clearer and clearer to me that there is a point of diminishing returns. If you’re going to be dissatisified unless you’re sure you got the best possible price, then you’re going to be dissatisfied.

  • avatar
    BDB

    Awesome!

  • avatar
    wannabewannabe

    Everything you say is true.

    I used to sell cars, so I’ve seen it from the dealer’s side, too. That being said, however, I will defend some (definitely not all) salesmen. When you’re low on the sales totem pole at the dealership, you’re kept in a state of roughly equivalent ignorance as the consumer. I was not told what a good deal was for the dealership, and when I asked, I was told that I wouldn’t be told because that would make me fight harder for every last cent. It didn’t matter that that wasn’t the way I operated. I tried to be an honest salesman. But after six months of making shit for money, working 65+ hours per week, and having to deal with customers with rightfully-obtained chips on their shoulders as well as the downright mean owner of the dealership and his greedy son of a bitch minions, I packed my grip and got the hell out of Dodge (or maybe I should say Ford).

    As my dad is fond of saying, “everything’s crooked.” Six months of selling cars proved it.

  • avatar
    mocktard

    Are there actually any dealers that suck less?

    CarMax is okay, I have bought both new and used from them, but as I learn more about cars and the process as a whole, the value of their premium pricing has waned.

  • avatar
    1981.911.SC

    SO….How much does your grocer pay for a box of Cheerios? Or a loaf of bread? Or bananas?
    The truth is, the right price is the price a buyer will pay and a price a seller will sell for.
    Do your self a favor, go to Edmunds/Truedelta or what ever, figure out what you want and what you will pay for it. Go in, tell the sales guy/gal, sign the papers, take the car home. If you want to spend the time and energy necessary to wring every last cent out of the dealer, then you should be prepared for them to do the same to you. I have had the good fortune to deal several times with a great sales guy at a pretty good dealership.
    I must admit the “finance guy” wasn’t quite a pleasant, but as I already had financing arranged, all he could do was try to beat my in-place deal, which once he could, and once he couldn’t.
    I have always felt like the buyer helps create the atmosphere, if you go in trying to beat them, they have to try and beat you. If you go in with reasonable expectations, more times than not, the buying experience will be good. AND it helps to remember, if you are not comfortable, go someplace that you are.

  • avatar
    no_slushbox

    The problem for the Detroit automakers is that the prices are too good.

    Their dealers compete against themselves in ways that complete dilute the brand image, and in ways that force the dealers to demand lower and lower prices, keeping the Detroit automaker accountants up late cost cutting.

    Killing dealers and brands will be bad for price competition on Detroit automaker cars, but that’s a good thing. Much better than the Detroit automakers being on the dole.

    Competition between businesses is good, it is the only thing that makes capitalism work. But when a business competes with itself that’s just stupid.

    Independent dealers are a good thing with regard to warranty work. Who has a better incentive to do warranty work, an independent dealer that will be reimbursed by the manufacturer and make a profit, or a manufacturer owned dealer, where the manufacturer will simply lose money by doing the work?

  • avatar
    Stein X Leikanger

    @Karesh

    I don’t think there are any other situations where you buy products where you are instantly considered a mark the moment you walk on to the premises. And if you haven’t prepared, and know enough to protect your wallet, the dealer will lift some cash you otherwise could have kept.

    Heck – dealers are sent to to be trained in order to make it happen.

    The internet’s your friend, as far as what it’s supposed to cost you is concerned – at least you can hit them with a benchmark and take the negotiation from there.

  • avatar
    1169hp

    I get a kick out it when people state, “I got a good deal on my new car.” Oh you did! How do you know this? Cause the dealer said so! Please. What’s he gonna say, “I wish a few more suckers of your ilk would grace our showroom floor.”

    Bottom line is, the dealer likely just made a nice chunk of change off of you and will continue to. That’s the way it works..

  • avatar
    pb35

    And if I think I got a good deal shouldn’t I just be happy?

    Yes. It’s the only way to stay sane. There’s no way to confirm that some schmoe on a message board got a better price. People lie all the time! Once I take delivery, I don’t look back. Life’s too short.

    I do agree that dealers in general suck.

  • avatar
    McDoughnut

    A not so little known fact is that most car dealerships are simply small (or at least) family run business – with a professionally designed front end – that being the marketing materials, showroom layout, etc. All the stuff provided or developed by the manufacturer.

    When combined with what constitutes “acceptable behavior” in the retail end of the industry – these types of organizations tend to develop ethical standards that would not be tolerated anywhere else.

  • avatar
    Point Given

    I’d simply love to go to your business and buy a product at zero profit. See how you like working for free.

    When you go to Best Buy for a TV you don’t know the markup?

    Do you know how much Dell is making when you buy a laptop from them?

    Amazon a book?

    When you buy an airline seat you don’t know the markup?

    When you buy almost any other product you don’t know the markup.

    Sunglasses at a Gas station…I have a wholesaler friend he pays .50cents per pair in China, marks them up to 4.79 and the gas station sells them for 9.99. Why aren’t you mad about that?

    Why does it have to be different with a automobile? Why are you sterotyping all us salespeople with the same brush. When I was at Lexus all of the salespeople have degress from University, we speak multiple languages are polite straightforward and professional. At my current position in Fleet Leasing again same thing.

    This has to be the most oblivious editorial I’ve ever seen posted here.

  • avatar

    One of the problems with car purchases is that negotiation is an expected part of the process. I hate that General Mills made their cereal boxes smaller and it’s really a punk-weenie move to squeeze more money from customers, but since it’s not a negotiation people don’t pillory the company. Car dealers are in kind of a rough spot because everybody knows MSRP and for some reason expects to waltz into the dealership and waltz out paying the same money for a car that the dealer paid.

    I’m no fan of car salesmen, or salesmen in general (I don’t trust anyone, ever, for anything if there’s money involved) but I recognize the system for what it is. Best way to go about it? Save up about $10-15000, do your research, find a lightly-used car, work a deal that you find acceptable, and buy it cash-money. Negotiating this rate and these terms with this warranty etc. will just get you screwed. If it’s inconceivable for you to save up $10-15,000, certainly don’t go out and buy a $35,000 car because that is a rather stupid thing to do, and bad decisions have bad consequences. Then again, people do stupid things for love, and I know I’m just as vulnerable as the next guy to going ga-ga over a car and getting bent over at the dealer…

  • avatar
    JohnB

    It’s too bad manufacturers use dealers anyway. If you want a Toyota for example, why couldn’t you just go to the Toyota Factory Outlet? Yep, I know I don’t know how the whole convoluted system works, but if there was a way to cut out the middle man, it would be nice…

    I did learn recently that many, perhaps most, dealers not only give their customers the shaft, but their sales force as well. From what I understand, they promise their sales guys big bonuses if they sell so many units, but then they hire so many sales staff, that it’s impossible for them to make the numbers. I guess that’s why there’s always high turnover in the business.

  • avatar
    NN

    GM really shit the bed on this one. Saturn had a great idea that could have gone one step further…just company-owned delivery & service outlets for their cars. No haggle, no pressure, full transparency, come into our shop or order your car online and it will be delivered here as you wish, etc. I want the manufacturer to make a (small) profit on my sale, because I want them to continue to exist. But I don’t any sleazeballs putting their hands in the pot, also.

    In fact, this may give Saturn dealerships a reason to continue to exist, if they could only work to sell all other brands (would never happen due to franchise laws, but oh well one can dream).

    They already do this in the UK and probably elsewhere.

  • avatar
    BDB

    Buying a car is the second biggest purchase in your life. In no way can it compare to a TV, let alone a box of cheerios. It’s more like buying a house.

  • avatar

    The problem with comparing cars sales to sales of bananas, 1981.911.SC, or dell computers, Point Given, is that those transactions cost tens of thousands of dollars less, happen far more frequently and have no haggle expectations (for the most part). Also, with much more frequent transactions of those goods come come an equilibrium of price between buyer and seller.

    And @Point Given, as I said in the piece, I don’t expect you to work for free, but I don’t trust you to tell me what kind of profit you need to stay in business.

  • avatar
    no_slushbox

    And what’s with the obsession with how much markup they make? How much profit does Costco make on a flatscreen? (FYI, a lot) Nobody cares because it’s cheaper than Best Buy, with a better return policy, and you didn’t have to be hassled by a smug pimply troll.

    People only freak out about the profit that the Detroit automaker dealers make because they are (generally) such assholes. Nobody is like, s**t, is that invoice price on msn.com really what the Honda dealer paid? Oh crap, now I can’t sleep, the dealer may have gotten a better-than-invoice price for being a volume seller.

    Still I can see how customers think that way. That’s how the Detroit automakers treat suppliers. It isn’t “give me the best product at the best price.” It’s “you’re going to have to cut the price until you aren’t making any profit.”

    Here is how to get the best price. Go to several dealers. Test drive the car. Be polite. Show a lot of interest. Leave. They will call you back. Return to the dealer that gives the best price. Don’t worry about how much the dealer made.

  • avatar
    Ken Elias

    Having been a dealer and dealt with retail buyers, I can state that the most important thing is whether the customer thinks they got a great car and a decent deal. Some folks do get great deals, others not so good. And hot merchandise is the best situation of all – no dickering required, take it or leave it. Did that person who paid sticker plus for a hot unit pay too much?? Or did they get a decent deal?

    Also, most car deals are somewhat complicated involving multiple issues such as trade, finance, credit, down payment, etc. Figuring it all out to make it happen is work – and trades involve risk. Then there’s the issue of consumer fraud which is much more rampant that one might believe.

    The bottom line is that new car sales contribute less to dealer profits than one might think. The real money is in service.

  • avatar

    I don’t care how much the dealers make. However, I want to be able to buy a new car which is mass produced consumer item that is virtually identical to thousands of the same units, like I do every other stinking mass produced item. I want to be able to do the same thing I do with every other item. When I look in the paper and see an ad at Best Buy for an item I have a reasonable expectation of purchasing said item at said price (not counting Black Friday loss leaders). I have virtually no chance of that at dealerships. When I spend 15, 20, 25 30 or more thousand dollars, I want my experience to be pleasant. I don’t want the seller to be abusive, curse me out, ignore me, or insult and demean me. If I ask for a product demonstration ( test drive) I expect to be given a product demonstration. I want to be able to expect that if I send my mother, a young friend, a recent immigrant or someone with a slight mental handicap to purchase said item that they will be able to purchase the same without having them ripped off simply because they are weak and not as savvy as I am.

    This will never happen

    All dealers must die

  • avatar
    TVC15

    This is really less of an editorial and more of troubled soul lamenting his inability to rise above the concept of the free market.

    Full Disclosure – I am a dealer. My family own several stores on the East Coast and I manage our Mitsubishi operation.

    The bottom line is this…The market sets the value for all commodities. Any good or service is worth what the market will bear, only and always. This is applicable across all transactions – wholesale, private and retail – for all commodities – new cars, used cars, diamonds, oil, bacon, lobster, foot massages, etc.

    You really wanna know what I pay for things? Use this simple formula.

    1. Select a piece of property you think would be suitable for a large-scale retail operation.
    2. Procure financing for property. (It’s a lot of fun)
    3. Develop and zone property in accordance with all state and local regulations. (Good times!!)
    4. Enter into franchise agreement with disconnected, inefficient monolith and agree to build hideously ugly, wildly expensive showroom. (Marble and Glass, Yay!)
    5. Build your workforce by interviewing literally hundreds of pathetic goofballs in the hopes that, maybe, 15-20 quality people can be found. (Repeat as often as necessary)
    6-20. Tons of other stuff you don’t care about.
    21. Secure floorplan financing.
    22. For new cars, battle other larger and more established dealers in your region for allocations of the most desired models and fail.
    23. For used cars, go to auctions and compete for the best units against larger, more established dealers from all over the world! And usually fail.
    24. Profit!!

    Or…

    You could research the market, determine a median value for the commodity you wish to purchase and find a dealer willing to transact the commodity at a price below the median (I’m waiting for your call!).

    Your choice.

  • avatar
    jg1708

    I think one of the main causes for the feelings of indeterminacy is that at the end of the day neither the customer nor the dealer really know how they made out in the deal. The editorial nicely summarizes the reasons for a car buyer’s uncertainty (i.e., customers don’t know how much cash they left on the table). However, after you walk out of the dealership with your new car, the deal is not over for the dealer.

    I imagine that a healthy majority of retail (non-fleet) auto transactions involve a trade-in, and for almost all of these the dealer does not have a customer lined up to purchase your trade-in at a set price. The dealer still has to sell your car, and he doesn’t know exactly how much he will get for your car. He may have a pretty good idea, but he is not certain.
    The dealers’ indeterminacy with respect to the majority of their automotive retail transaction breeds a culture than can both cope with the indeterminacy and capitalize on it when possible.

  • avatar
    psarhjinian

    Why does it have to be different with a automobile? Why are you sterotyping all us salespeople with the same brush.

    Because those are retail items and you generally can’t bargain on them. You can try, but it’s not going to happen. You don’t know if you got a good deal at Best Buy or not, but you do know that you weren’t played for a sucker when you made your purchase.

    Hell, compare buying a car to buying a house:
    * With the house, it’s a simple offer/counter cycle until both parties reach an amenable selling price. The fees and commissions are disclosed up-front, or are easily available.
    * With a car, it’s a dance of payments, incentives, hold-backs, secret or conditional credits, plus any number of shadow fees that the dealer tried to tack on to boost gross margin. Nothing is up-front outside of a Saturn dealer.

    I’ve bought other things that are about as problematic (I spent two weeks negotiating the purchase of high-end storage systems, the “oh, wait, no, this is my best price” every day was really tiresome) but nothing is as dirty as car buying.

    The Saturn example is especially poignant. Despite making, at their best, miserable little second-rate econoboxes that weren’t all that reliable, people loved them, more than they did Lexus. If the lack of dealer bullshit is enough to make Ion owners happier than RX350 owners, that should tell you something about how utterly deplorable the typical car-buying process is.

  • avatar
    rcory

    This is the worst article I’ve ever seen on TTAC. It’s full of foaming-at-the-mouth ranting (I’d say flaming of dealers, but I know there’s no flaming allowed here…), with no substatiation of any point raised. I have to agree with 1981.911.SC, do your homework, and if you are not comfortable with the atmosphere where you are shopping, just leave. It’s not that hard. Sheesh.

  • avatar

    TVC its not a free market or capitalism at play if I get the government to say my business is the only one that can sell said item. If I could freely buy Toyotas from both Target and Walmart then it would be a free market and capitalism

  • avatar

    @TVC15

    “The market sets the value for all commodities” Along with manufacturer subsidies, government subsidies, dealer franchise state laws…there’s very little of the free market in car sales.

  • avatar
    willbodine

    100% accurate take. Dealers have ginned the car purchase system for exactly this reason. To keep the buyer in the dark. Most car dealers are among the most rapacious humans on the planet. Their god is greed. Although, being, in the main, “conservative, Christian Republicans” they can never admit that. As long as they get richer, it’s proof that the American way works. And while they are at it, they’ll spend some of that loot to buy politicians (wanna guess which party?) to keep the game rigged in their favor.
    Well the chickens are coming home now, and it couldn’t happen to a nicer bunch of guys.
    And yet, car dealers rank above lawyers as the profession Americans consider to be the least ethical. If I were a lawyer, I’d feel insulted.

  • avatar
    Usta Bee

    @ Point Given

    I know your example of Lexus salespeople having University degrees was meant as an example of the fine quality of people that work for Lexus dealers, but I look at it from an opposite viewpoint.

    If you have a college degree and you’re working as a car salesperson chances are you’re underemployed. Even with a degree in a related field such as business or marketing a person should be able to do better than to sell cars. Car salesman is an unskilled labor job that doesn’t require any formal degree or schooling.

    Now, if you were to say the people were working their way THROUGH college as car salespeople it’d be a different matter.

  • avatar
    TVC15

    Open a phonebook, Sherman. There are thousands of Toyota dealers. All in competition against one another.

  • avatar
    200k-min

    I’ve never bought a new car so I can’t really comment too much. My father drove company cars for years. When it came time for a new car the company had a prenegotiated price for a base model. If he wanted to add power windows, CD player, etc. there was a price list, which was also negotiated as it was far cheaper than a dealer would normally charge. He faxed in his order and what dealer he’d take deliver at. Simple as pie. With the internet I’m not so sure why the transaction isn’t similar. A new car dealer should be nothing more than a receiving agent given a minimal $$$ cut from the manufacturer. Slimy salesmen swarming the cutomer should only apply to used car sales where price is a little more up to debate. A new car is a consumer product no different from a new toothbrush. Big purchase yes, but why it has to be different from anything sitting on the shelf at the local Target store is beyond me. This would slash sales staff, make prices cheaper by ending spiffs and other crap. The laid off salesmen can go stock shelves at Safeway, haggle with people on used cars, or get an education and find honest work.

  • avatar

    TVC I don’t have to buy a samsung LCD at the samsung store, I don’t have to buy lays potato chips at the frito lay store.

    If walmart wants to sell Toyotas Can they?

    No its not a free market or capitalism in this case

  • avatar
    GS650G

    Car companies should do away with sales at dealers and just operate service centers for warranty support. Might even make a tidy profit. Alternatively the manufacturer could just pay to have your car serviced at any one of millions of car repair places coast to coast.

    Toyota has sold cars door to door in Tokyo for years. If they can move metal without a stealership then why not here?

    The first company that truly delivers dealer free sales will conquer the world.

  • avatar

    If it will put things into perspective, you can haggle on a TV (and other stuff) at Best Buy. I’ve done it. Successfully. It’s a matter of what the consumer knows.

    Dealers, internet merchants, big box stores, you name it… as long as there’s middlemen involved, you’ll never know if you’re truly getting a “good deal”. You will only get a “good deal” if you convince yourself you did. If not, well, you’ll never be happy with anything.

  • avatar
    TVC15

    “The market sets the value for all commodities” Along with manufacturer subsidies, government subsidies, dealer franchise state laws…there’s very little of the free market in car sales

    @Marcus
    Ah, now I understand. Your real issue is with the manufacturers, the Federal gov’t and state legislatures. We find ourselves in agreement. All three are massively corrupt and greed-driven, much more so than any family-owned small business.

  • avatar

    Count on all dealers and salesmen to lie and bullshit in Comment Streams also.

  • avatar

    Bingo Sherman Lin!

    This is not a free market, this is a very limited sales channel. This is also NOTHING like buying a house. Cars are mass-produced consumer items, period. The average American buys perhaps a dozen of them over their lifetime.

    NO OTHER consumer item is as hard to buy as a car, and this is precisely due to Car Dealers. No other buying experience is so unpleasant.

    I’ve said it many times before, I’ll never buy another new car until I can order it online the same way I buy everything else.

    –chuck

  • avatar
    TVC15

    If walmart wants to sell Toyotas Can they?
    Yes. See the steps I outlined above.

    TVC I don’t have to buy a samsung LCD at the samsung store, I don’t have to buy lays potato chips at the frito lay store.

    As many above have stated. Cars are not comparable to bananas, chips or even TVs. Using such examples to make a point brings nothing to the debate and makes you seem uninformed.

  • avatar
    AKM

    This piece seems too aggressive for its own good. I don’t believe in large-scale dealer conspiracy to screw the consumer. Heck, given the low margins at dealerships, why do they get in business for?

    Classical economy theory posits that capitalism works perfectly when human beings (“homo economicus”) can make rational, informed decisions.
    Considering that cars are potent status and power symbols, rationality goes off the window. As for informed decisions, there are plenty of great websites that help one price a car, evaluate rebates available, and generally get the best possible deal.

    I don’t see where the problem is, especially considering that the process is actually MORE transparent than for most other consumer goods.
    Financing is definitely a sore point, but that’s the fault of financial institutions as much as that of dealers.

  • avatar
    63CorvairSpyder

    Great article and thread.

    As an ex-car salesman/mgr I can tell you that three of the four dealers I worked for in northern NJ were creeps. They were thieves who would screw the customers, their managers, the salesmen, the mechanics and the manufacturers at every opportunity. Oh, and the girls in the office too….(literally).

    I think the above advice to do your research, learn the cost, the holdback, the incentives, etc. is the best approach. Figure out in advance before going to the dealer the price you will pay for the car. If you get there or relatively close, buy the car and be happy. Don’t beat yourself up thinking the dealer might have made an extra hundred or two on you that you didn’t know about.

  • avatar
    menno

    Is ANYBODY with a brain and some pull from General Motors reading this?

    Hellooooooooooooooooooooo anybody out there?

    Remember Saturn? Well, despite the fact that it never made you a penny, can you not see the handwriting on the wall, here?

    MOST NORMAL PEOPLE DON’T LIKE TO FEEL LIKE THEY ARE AT A MIDDLE EASTERN BAZAAR.

    OK here’s the thing, General Messup.

    Take the entire Saturn pricing and put it forward through ALL GM DEALERS.

    Figure out what the cars can sell for in the market place (as in the real transaction prices over the past 2 months), figure out if the vehicle is profitable for you and the dealers at that price; if so, that’s the new non-negotiable price; if it’s not profitable at that price, then CLOSE IT DOWN.

    The look at the puzzle pieces left, and figure out how to make it work.

    For example, if the only Pontiac that is saleable for a profit is the Vibe and the Vibe isn’t enough to sustain Pontiac, then see about moving that line to Chevrolet.

    Then ADVERTISE THE HECK OUT OF THE FACT that GM is now “non-negotiable” fixed “Saturn style” pricing across the board.

    Then sit down with the dealers – on an honest one to one basis – and say: OK guys, those of you with 4 or 5 star operations, on the right side of the room. Otherwise, over on the left side of the room. On the right, put pins in the big map on the wall, showing where your dealerships are.

    Are there enough dealers on that map? If so, great. If not, call the 3 star dealers over ONLY IF THEY ARE IN “OPEN” AREAS ON THE MAP.

    As for the guys on the left side of the room, sit them down and start writing checks. We’re buying back your business; you can keep the building, and sell used cars from GM and auctions if you want.

    Then go back to the right side of the room, and start parsing out dealership franchises for Chevrolet AND/OR Buick-GMC-Cadillac with the small upcoming Chevrolet Cruze specifically renamed the “Saturn by Chevrolet”. Kind of like the original 1960 Valiant was sold by Chrysler-Plymouth dealers, or how AMC sold their top of the line Ambassador by Rambler back in the day.

    Then to REALLY tell the public that you’ve changed, make 2 more changes.

    Put a 6 year bumper-to-bumper REAL warrantee in place, backed by a non-government-bailed-out, real, top line insurance company such as Amica Mutual (so if GM goes under, the insurance kicks in to pay the warrantee costs). Make the warrantee EASY TO UNDERSTAND AND IN PLAIN ENGLISH. Dig out an early 1970′s AMC Buyer Protection Plan if you want to see how it was done properly before.

    Then offer 6 years GM scheduled servicing to each and every new vehicle sold or leased, pre-paid, at a fixed menu price as the major option – and show, in writing, how it could save the buyer money. Have it transferable to the subsequent owners at no cost. For Cadillacs, GMC’s and Buicks, make this provision STANDARD. (Hence, a real reason for a slightly higher price on a GMC than a Chevy pickup).

    Done. Now watch as your decline stops and people slowly start having some confidence in your company, again.

  • avatar
    Kurt.

    People buy and sell cars all the time. Saying it is different than any other purchase because of price point is silly. Unlike homes, most people will buy several cars in their lifetime. It’s a car. Set a price and get over it.

    The problem is that there is no price. You bring up Best Buy TV’s…You know that a particular model is $2990 because WalMart, Circuit City and the local Mall all sell it for that. Maybe the local TV store is $3149 (increase costs of the “little guy”). If you really care, with a little research, you can determine about what that TV cost’s Best Buy. Then you either go buy it or do without. If you go in and say “Look, I know you only paid $1250 for it, I’ll give you $1500 and carry it out myself, they will throw you out…without the TV. With a car you don’t have that.

    Between dealer incentives, cash back, money on the hood etc, you have no idea what a car is worth and can only base your “deal” on MSRP. I really disliked Saturn vehicles but I agreed with their sales philosaphy.

    You want to haggle? Go to Casablanca. Otherwise, pay the 50 cents for damn coffee.

  • avatar

    If dealers earn so much money from car sales, then why are so many of them folding?

    If you think company-owned dealers would be better, call a company-operated “customer care center” and check out the service you receive.

    In the end, though, I’m not arguing that dealers are great. Just that the sales outlets for other negotiable products (electronics, furniture, art, jewelry) are no better. There are plenty of places where you can haggle over the price of a TV. If you’d rather go to BestBuy and pay a higher fixed price, you can. Some dealers have also offered that alternative. I’m guessing (but don’t really know) that it didn’t work out.

    Groceries might be cheaper on a unit by unit basis. But overall I suspect I’ve overpaid more for groceries during my life (if by “overpaid” we mean the amount over the lowest price available elsewhere in a given month) than I have for cars.

    Ironically, those who put in the effort to get a low price benefit from the current system. If prices were fixed, they’d end up close to the average transaction price. If you do better than the average transaction price, you’re coming out ahead compared to a fixed-price system. Are you getting the absolute lowest price? Probably not. But then if everyone got the absolute lowest price then dealers would go out of business.

    So, what are we complaining about? The need to haggle, or the feeling that the dealer is earning too much? These are two different things, and somewhat in opposition. Haggling benefits the savvy buyer much more than it benefits dealers. I bet dealers would prefer a fixed-price system. Only one problem: it’s not legal given anti-trust laws.

    At least with a car you know what you’re getting. With furniture and especially with matresses, good luck.

  • avatar
    MRL325i

    Allah’s Ford Lincoln Mercury

    If there are any gearhead headchopping jihadis out there I would guess you might be hearing from them (or him).

  • avatar
    thalter

    Why exactly would I trust you to determine for me what a fair share of my money in your pocket is?

    Of course the reseller sets the profit margin? I cannot think of another industry where the cost of the product (and therefore profit margin) is known to the buyer. Most items you buy retail have a gross profit margin of anywhere from 10 to 40 percent (generally decreasing as the cost of the item goes up). I don’t hear anyone complaining that mattress they just bought for $999 cost the store 700 bucks.

    Article author aside, I don’t think most people begrudge the dealer a making a profit. The big problem is the lack of transparency in the pricing, and the fact that the sticker price means nothing any more. GM tried a few years back to bring their sticker prices in line with the transaction prices by reducing the sticker price, and it was a failure. People still automatically expected at least 3 or 4 grand off the sticker price, so all it did was cost GM more margin.

    The fact that the sticker price is meaningless breeds a lot of fear and uncertainty, which leads to the the fear that the guy in the cube next to you is getting a better deal than you are.

    My advice – get over it. Even if the guy in the next cube over is getting a better deal, he’s probably paying only five bucks a month less than you are. Not worth getting your blood boiling over.

  • avatar
    TaurusGT500

    While not agreeing with everything in the editorial, there are indeed many sad truths about auto retailing.

    Which begs the question… why? Why is buying a car such a mess?

    For what it’s worth, my contentions: The single most important reality of this business is that the salesperson and the Business Manager are on commission.

    No matter how friendly and chummy the salesperson or avuncular the “Business Manager” they aren’t paid to be your friend. It’s a zero sum game.

    But aren’t there other all-commission professions that don’t have such a bad rap?

    Absolutely. There are many sales positions whereby the seller makes their livelihood on commission or bonus or some such “variable comp”. Many are honorable and noble and extremely professional (think everything from b-to-b computers, software, to heavy industrial machinery, consulting services etc, etc).

    Q: So why so different with car sales?

    A: All commissioned sales hinge on two key elements.

    1 – EVERY commissioned salesperson has experienced circumstances where they are tempted … at least on occasion …even if only once in a blue moon … to oversell their customers. Fate has conspired to give them an upper hand in such a way where they are sorely tempted to oversell, overprice, load ‘em up with product/services that aren’t really needed. Whatever. The only thing stopping them is either their own moral code or the built-in checks and balances in their industry.

    2 – Every sale profession has some degree of checks and balances that mitigates against too much of #1. Some have more… some have less.

    For example, many B-to-B sales reps have “territories” of but a handful of companies, or even a handful of departments at a single company. They may depend on literally a dozen individual customers for their livelihood. They burn those bridges at their peril.

    Also, in a B-to-B setting customers are generally more objective and less emotional than in a showroom. They set the pace of the deliberations. And if the quote is big enough there may be others drawn into the RFQ analysis . …and of course the chain-of-command reviews. These are all checks and balances that militate against quick, emotional, lop-sided decisions.

    Enter the new car showroom. Entirely different set of rules. The searing temptation to oversell exisits with every single customer that walks through the door. Forget the banal tripe about “building customers for life” and garnering referrals. These guys live their lives 30 days at time (in sometimes a week at a time).

    Sell more this month – take more cash home to Momma. Don’t sell enough – you may be out of a job. They’re not thinking about you coming back in three years. They need to make their quota this month or the game is over for them.

    Checks and Balances: Almost none. The customer willing to invest some time in reseach is one. And exercising his constitutional right to turn on his heel and walk out the door is another. But that’s about it.

    From these two factors – the system of “incentives” and lack of checks and balances – flow all the other dishonest, disingenuous tactics and practices mentioned here and elsewhere.

    Are there any honest car salesman? Sure. Undoubtedly there are some that have a moral code that provides the requisite checks and balances that the dealer-designed sales process lacks. But that’s a topic for another time. (…maybe RF will extend his brand and start a truth-about-moral-codes site.)

    The typical process is designed in such a way that there are few checks and balances on integrity and it is stacked in such a way to reward those of questionable moral suasion.

    Some bloggers have contended that in these deeply troubled times, dealers should/would change their deeply ingrained predatory ways.

    I contend just the opposite. A few may see the light but dealing with most dealers will get worse. With their very businesses hanging by a thread they will do what they only know how to do.

    The pressure to close and close now; to up-sell/cross-sell; and get more gross, etc will only intensify.

    Not saying it’s right…just saying it is what it is.

  • avatar
    TVC15

    Karesh nailed it.

  • avatar

    @TVC15

    While I most certainly have issues with manufacturers, the federal government and state legislatures, it is – in this particular instance – the dealers I have a problem with.

    1) You get money from the maufacturer when you sell a car. That means you get money instead of me saving more money when I purchase a car. That sucks.

    2) Dealers are asking for concessions from the federal bailout. That means I will be paying you – through the government – to stay in business. That sucks.

    3)Dealers got laws passed in state legislatures to keep me from buying a new car in potentially better and potentially cheaper ways. That sucks.

  • avatar
    cdnsfan27

    Marcus, where you a lay down on a bad deal or what. This is the most one-sided opinion piece I have ever seen on this site. No facts, just foaming at the mouth. I sold Fords for a small town family owned dealership where the motto was “Screw the customer once and he will never come back. Sell him the right vehicle at a reasonable price and you will have him forever, as well as his family and friends”. We did good business, it was fun and our deals were sound. Not all are “stealerships”

  • avatar

    @All Commenters

    I’d like to take a brief moment to thank all of you for the kudos and/or criticisms. I appreciate that you took the time to comment.

  • avatar
    rcory

    Back in the day (maybe early ’80s???) Oldsmobile tried a one-price strategy, the price on the car is the price you pay. It was a miserable failure. Customers would not accept the fact that they couldn’t haggle! So to blame dealers completely for the car sales environment is not totally fair. Buyers want to negotiate! Too bad so many step into the showroom unprepared. It’s their own fault.

  • avatar

    TVC I am not uninformed.

    remember my line about buying an item and not being demeaned or insulted by the salesman?

    Walmart cannot open a Toyota franchise here in Tampa. The local Totota dealers wouldn’t like that. You or I couldn’t. Now Walmart could buy an existing franchise but they can’t buy Toyota from the factory and sell them.

  • avatar
    paulb

    I’m on the side that says the system is broken and it must be fixed… yeah, car dealers suck bigtime.

    @GS650G: “The first company that truly delivers dealer free sales will conquer the world.”

    I agree with you. This or a Saturn-like operation is just what we need to break-free of this helluva “car dealership” system/tradition/norm/way-of-life. Governments must first lift the veil of protectionism first before this can happen. No manufacturer is willing to risk litigation over this.

  • avatar
    Edward Niedermeyer

    Great minds think alike…

  • avatar
    Nicholas Weaver

    A little bit of well-armedness and no-BS tolerance can RADICALLY improve the process.

    The first is to do a two-part purchasing.

    a) Agree on an out-the-door price. For this, you should contact many dealers, with the car you want, and only negotiate out the door price. You shouldn’t care if its $1 for the car and $19253 to fill the gas tank, or the other way around.

    This removes the entire ability to load up charges and everything else, and allows you to comparison shop across dealers.

    b) THEN talk financing, and by talking financing, IGNORE everything about monthly payment etc, you should be focused solely on interest rate, duration, and down payment.

    If there are no special factory incentives on financing, do financing independently: go to your local credit union and get the loan through them, and not the dealer.

  • avatar
    TVC15

    1) You get money from the maufacturer when you sell a car. That means you get money instead of me saving more money when I purchase a car. That sucks.

    Wrong. I can achieve performance/volume bonuses on certain models when you and many others deem me worthy of earning your business. How does that “suck”? Besides, once again that is a manufacturer policy. Dealers don’t control factory incentives. Your vitriol is misdirected.

    2) Dealers are asking for concessions from the federal bailout. That means I will be paying you – through the government – to stay in business. That sucks.

    I see the bailouts, mostly, as bad policy. Bad GOVERNMENT policy. Once again, you’ve misdirected your anger.

    3)Dealers got laws passed in state legislatures to keep me from buying a new car in potentially better and potentially cheaper ways. That sucks.

    Enlighten me. What have we done to YOU? And what are these “potentially better and cheaper ways”? What if these ways affect ME adversely?

    Just put on your big-boy pants, do your research, and get your best deal. It’s not that hard.

  • avatar
    Point Given

    @markus – as I said in the piece, I don’t expect you to work for free, but I don’t trust you to tell me what kind of profit you need to stay in business.
    **********

    Again, this is counter capitalist. Does a home builder tell you what kind of profit he needs to stay in business?

    I still doesn’t see why does it matter with cars more so than any other product? Is profit a dirty word?
    *****
    @usta bee-

    If you have a college degree and you’re working as a car salesperson chances are you’re underemployed. Even with a degree in a related field such as business or marketing a person should be able to do better than to sell cars.

    Car salesman is an unskilled labor job that doesn’t require any formal degree or schooling.
    *****

    I have a bachlor of commerce degree, I worked in the insurance industry for a few years, ZZZZZ. I owned a retail store for two years too. I considered buying a Ziebart franchise, my family owns a large motel and restaurant…..

    Car sales is a rush, like all commission sales. It takes skill to sell, lots of technical knowledge to know lest you get lampooned by your customers. There’s more to it than being an order taker which is what you seem to imply.

    An applied business degree in automotive management in Ontario
    http://www.georgianc.on.ca/academics/programs/program_info.php?major=AUTM

    FYI The sales people at Lexus ALL (7) earned over 110k last year. No BS, it’s the only lexus dealer in our market, everything sells at full retail.

    It’s a fun career and I love being involved as a provider.

    To Everyone – you expect to deal with a professional that’s what you’ll get. you expect to get slammed and bent over, that’s what you’ll get.

  • avatar
    Richard Chen

    We’ve gone to Fitgerald Auto Malls twice for purchases as they’re fixed price and posted on the web for all to see. They have bent over backwards to order a vehicle to our specifications. Others here (and elsewhere) have vouched for them and some buyers have traveled hours to make a purchase. They carry only a dozen brands, however.

    The time we bought from another dealer was with the price already agreed upon by phone. It helps that we don’t finance our purchases as it removes a big part of the pain mentioned above.

  • avatar

    @Michael Karesh – “If dealers earn so much money from car sales, then why are so many of them folding?”- The economy is fairly bad right now. You might have noticed.

    “If you think company-owned dealers would be better, call a company-operated “customer care center” and check out the service you receive.” – When I want to buy from a company-operated service the service is pretty good.

    @Edward Niedermeyer – Indeed! And while you made the point more concisely, I did use the word “suck” more often.

  • avatar
    63CorvairSpyder

    @cdnsfan 27:

    I agree there are some very good, honest and upstanding dealers out there. They most often are family owned, small town, single point dealerships. Many times these are on their third or fourth generation of family ownership.

    Unfortunately, these are the exact dealers the GM, Ford and Chrysler do not want anymore. They really only want mega-dealers , on the highway, with multiple stores. They have been doing there best to close up the small town small dealers for years now.

  • avatar

    @TVC15 1) Holdback. (And others I don’t know of?) 2)It’s dealers that are asking for it. My anger is properly placed. 3) “I’m tied to you for new car sales and warranty work and the only ones who want it that way are you.” Enlightenment.

    @Point Given “Does a home builder tell you what kind of profit he needs to stay in business? “ Nope. But I wouldn’t call it anti-capitalist to not trust you to tell me when I get a good deal.

  • avatar
    NickR

    Bottom line is, the dealer likely just made a nice chunk of change off of you and will continue to. That’s the way it works..

    I remember in a previous life in more prosperous times seeing the books on a company that owned a several new car dealerships. The simple truth was they lost money on their new cars (in aggregrate). This was not accounting trickery, these were real losses. Where they made money was on used, in most cases several thousand up on each one. That and the service department kept them afloat. New cars were loss leaders, even then.

    (As an aside thinking of my lifetime dealer experiences…the excellent (Infiniti was the best of the bunch, Lexus, and Toyota), the good (Ford, Chrysler, Honda), and the ones that sucked (Mercedes was abominable, Nissan, and GM).

  • avatar
    George B

    I dislike auto dealers because I believe that they cost me time and money in a process that is about as pleasant as a prostrate exam. There is no point in starting to buy a car at any time early in the day because the dealership will use the clock against you to wear down your resistance to their price. In addition, dealers order what they want, not necessarily what I want. They appear to add high profit options that add more cost than value to the car. I appreciate that dealers have significant costs, but I reject the idea of the need for the middleman between myself and the manufacturer.

    I want a build to order direct sales model instead. I want to order exactly the car I want at a good price. In exchange I’m willing to pay a significant part of the vehicle cost in advance. I get the car I want and the manufacturer gets some cash up front, a guaranteed sale, and minimal finance and storage costs. Seems like a win-win deal that is blocked by dealer franchise laws.

  • avatar
    Point Given

    I don’t tell my people ever they got a good deal. I say fair, fair to me, fair to my company, fair to you.

    I’m not going to pretend you are getting for $300 over dead cost, but I’m also not going to charge you $10,000 over.

  • avatar
    Stein X Leikanger

    Edward Niedermeyer :
    February 25th, 2009 at 12:59 pm

    Great minds think alike…

    Good article. There are good dealers, but the buying experience is close to brand destruction in many instances – like buying a beer in a bar, and watching the barman piss in it before handing it over to you, while overcharging you.

    The comment about commissions above – I think that hits the mark. People on the floor are in their own production of Glengarry Glenn Ross, being pushed hard to make sales.

  • avatar
    Geotpf

    The reason haggling for a new car sucks is because you are haggling. That is, it’s in the best interest of the dealer to make the price as squishy and vague as possible, because it’s negotiable. Some people suck at negotiating, and the dealer can get more money from them. Some people are good at negotiating, and even though the profit level is less, the dealer still gets a sale (and probably the purchaser will bring the vehicle back for service for years to come, bringing in more money).

  • avatar

    @Point Given “I’m not going to pretend you are getting for $300 over cost, but I’m also not going to charge you $10,000 over.” – See? In auto sales you just can’t talk “deal” without “cost.” And I don’t know if I got a good (or fair) deal and I’m not going to trust you to tell me.

  • avatar
    ravenchris

    “We the People” has become “We the Corporations”.
    The auto dealerships mimic corporate America while using much less lipstick and lubricant.

  • avatar

    Marcus:

    You seem to assume that if the manufacturer owned the dealer, then the cost of the car would be lower. But the manufacturer would still have to compensate sales employees. So I doubt the end cost would be affected much.

    Even when they introduce new brands manufacturers–except for Daewoo–have stuck with the dealer model. They were not legally obligated to do so. So why did they? For example, BMW could have set up factory-owned stores to sell MINI. So why didn’t they?

    While it’s true that independent dealers can be the worst, they can also be the best. Factory-owned stores are more likely to be indifferent.

  • avatar
    bill h.

    I actually have had a good time buying the last couple of cars at dealerships (given that’s been over a 15 year or so period).

    As has been mentioned before, knowing your permissible “out the door” cost up front helps, assuming the car is equipped the way you’re happy with.

    Getting preapproved financing helped too. Of course, with all the manufacturer incentives nowadays you might have to do a little more homework up front. But actually having the financing out of the way saved time for both me and the dealer, as I told them up front and they didn’t feel so obligated to “work” me on internal deals.

    Perhaps there’s a demographic thing involved too. One of the brands I drive has one of the more highly educated (and yes, affluent) customer bases. The dealer knows this, and they generally treat the folks who come in accordingly. Tastefully attired, no full Chicagos/Clevelands, and very courteous. It helped that my salesman had worked there for 15 years and was a true fan of the marque, not somebody who just came in from selling Toyotas or Chevys the month before.

    Because of the ethnic diversity where I live, many of the dealers in my area have “rainbow” sales staffs, who can talk in native languages or with full cultural cognizance of their customer. I suppose that helps avoid misunderstandings too.

    Conversely, if the sales person I was dealing with was an obvious immigrant, expressing an interest in or some knowledge of their native country was a great way to break the ice and start any negotiation on the right foot.

    BTW, all this becomes easier to do when one gets older, and you have a different perspective on which battles are worth fighting (and the last $100 on a car deal is not necessarily one of them).

  • avatar

    @Michael Karesh – The only assertion I’m trying to make is that being tied to car dealers for new sales and warranty work sucks. I assume nothing (except said suckitude). I would absolutely like to try the manufacturer-owned option and if that doesn’t work I’d like to try something else. What I’d like are options as opposed dealer-backed government mandates.

  • avatar
    Spitfire

    Couldnt agree more!

    crc
    Same situation, resolved just 20 minutes ago.

    BDB
    Rubicon acquired :)

    Michael Karesh
    There is certainly a point at which its just not worth your time, especially when in most cases 1k is less then 20 bucks a month when you are financing. Enjoy it and focus on something else after awhile. I’ve have learned this after obsessing over my recent purchase for more then 2 months.

  • avatar
    Ken_DFA

    I just bought a new car last month. My big issue with car salespeople is this: “What exactly am I paying you to do?”

    It certainly isn’t to inform me and guide me into the perfect vehicle for me. My salesperson was wrong about half of the specs on the vehicle I chose and I ended up spending half of the test-drive explaining various features to the salesperson.

    The salesperson sure didn’t recruit me or do anything that made me want to come to this particular dealership. So clearly I’m not paying for spectacular customer attraction talents. My salesperson just happened to be “up” when I walked in the door.

    The only actual “work” that my salesperson performed was to order the car, tell some dealership monkey to put a coat of wax on the thing before I picked it up and then hand me off to the F&I guy. Fantastic! You certainly earned my money there, dude.

    I hate feeling like I’m paying someone to simply exist. It’s no different than emptying your wallet for the homeless person who accosts you on the street.

  • avatar

    bill h. – “BTW, all this becomes easier to do when one gets older, and you have a different perspective on which battles are worth fighting (and the last $100 on a car deal is not necessarily one of them).” – You’re absolutely right, and there are far worse things in the world than getting taken for $100 on a $30000 purchase, but doesn’t it suck – just a little, even if it’s not worth doing anything about – that dealers make it so hard to know if you did get screwed out of that $100?

  • avatar
    Dave M.

    Do your self a favor, go to Edmunds/Truedelta or what ever, figure out what you want and what you will pay for it. Go in, tell the sales guy/gal, sign the papers, take the car home. If you want to spend the time and energy necessary to wring every last cent out of the dealer, then you should be prepared for them to do the same to you.

    Well said. I usually ask for the new guy/gal. My opening line is “This is exactly what I want, and if you hit my magic number, we’ve got a deal. You get one chance.” No, they don’t know my number ahead of time. 4 times out of 5 recently (I help a lot of people buy cars) their number is lower than mine.

    If everything goes through painlessly (I let them know don’t even start with your “pad-ons”), I return in a couple of days and give the salesperson a $100 gift card to Target or Walmart for their efforts to keep it honest. All too frequently the newer salespeople’s commissions are a constantly moving, manipulated number against them.

  • avatar
    e36m3

    Menno, I like your idea for dealerships.

    But on the buyer’s end, purchasing a new car is like buying a home, or even a used car. One must negotiate a price that he is willing to pay, and that the seller is willing to sell for. One can always speculate that he or she could have done better in the deal, but then again perhaps not. Do your homework and decide what you are willing to pay, then make your offer, and if the seller accepts, you’re in business. Move on with your life.

  • avatar
    RNader

    Reminds me of the scene in Fargo were William Macey tries slip paint/fabric protection onto that agitated couple. The part were he walks out of the room for 10 minutes and returns to say……..”well, we’ve never done this before”. It’s a classic.

  • avatar
    Airhen

    After buying five new vehicles, dealers have a process setup to get you to pay as much as they can. Sure as any business is, they are in the business to make a profit. However no dealer can tell me that their process is not setup to be as least honest as possible. Like scribbling on a sheet of paper to confuse you with numbers, ganging up with the sales manager and going back and fourth while you get tired and hungry (and even more of it if you bring a trade).

    Then after all that, they send you to the finance department for round two! Even if you bring your own financing or pay cash, they still give you their sales pitch. With the last creep, he told me not to take a wheel and tire warranty as it wasn’t worth the money in an effort to make me think he was on my side. What a laugh! And then they get rude when you don’t bite.

    What I can relate to this article is that as smart as I think I try and be throughout the ordeal, after every purchase I have felt like I was taken advantage of and not even kissed. I can only imagine the laughs that they have after customers leave. “High fives! We scored a big one guys!”

  • avatar
    wsn

    Point Given said:

    I’d simply love to go to your business and buy a product at zero profit. See how you like working for free.
    When you go to Best Buy for a TV you don’t know the markup?
    Do you know how much Dell is making when you buy a laptop from them?

    If you don’t make money selling stuff, you can always close down. The customers won’t care what’s the real cost of your crap. They only care if this is the best overall value.

    For example, GM probably lose money on every $40k Volt they can sell (assuming the Volt will be ready for sale). But then I don’t care. Because that’s a crappy value to me. I can buy 2x $20k Prius instead, and Toyota is making money on both of them.

  • avatar
    63CorvairSpyder

    @Dave M:

    Excellent advice.

  • avatar
    carguy

    Since selling cars is like selling gas and customers would cross town if they knew they could get it $50 cheaper there, the dealers have engage in obfuscation to make sure that the buyer doesn’t have the full knowledge to judge if the deal is sound or not. So they engage in complex financing practices and use dealer options to differentiate the car from another so you can never really compare the two deals.

    But you can fight back – I took my laptop and my wireless data card with me to my last car purchase and it gave me an edge as I could compare on the spot. You still won’t know if its the best deal in town but it does help.

    I don’t begrudge dealers their living but, as the editorial says, it still sucks.

  • avatar

    I apologize for re-posting this but Marcus’ editorial was too much fun to ignore..

    Car dealers aren’t evil; they’re a necessary evil

    I have begun to ponder the “Why can’t we just buy our cars at Walmart ?” theory and have concluded that until we come up with a better plan to handle the trade in of our present vehicles, Walmart would have to rent the State of Indiana to park all the trade-ins. They would have to determine how to make the payoffs in order to get the titles to resell the vehicles. They would have to hire “experts” who can determine the worth of each trade in and to allocate enough resources to fix them relocate them and prepare these vehicles for remarketing, and set aside enough money to hold these vehicles until they get paid for them by the next customer.

    Then there is always the “I sold my car dot com” philosophy whereby each of us as an independent agent sells our own trade, because we feel Walmart didn’t give us enough allowance. Craig’s list and e-bay are great ideas and work for many of us but how many of us have the time and patience and financial wherewithal to bring the sale of our vehicle to a tidy conclusion. Don’t get upset when the person who wins the bid doesn’t get the necessary funds because she is in the process of selling her vehicle, Too bad you have already paid off your trade at the bank and your bid winner pulls out at the last minute.

    Upon closer examination of the retail industry, one realizes that the car dealer, not unlike the turkey vulture and that little beetle that cleans off the flesh of human skulls for medical schools” have proven themselves to be integral and necessary component of the American auto industry. You NEED us on that wall! You WANT us on that wall!

    Whoever solves the trade in conundrum will rule the industry.

    Believe me, The states want licensed dealerships because at least the collection of sales tax and basic consumer concerns can be tracked in 200 entities instead of 30,000 plus.

    If GM folds tomorrow, most dealerships will have a profitable used car business and probably reduce their employment by 50 %. I suppose their laid off employees could apply for a job at Walmart.

  • avatar
    nonce

    Too many people here are defining their happiness in terms of other people.

    “I can’t be happy if someone else got a better deal.”

    Here’s the question: is it a good deal for you? Would you rather have this $25,000 in cash or this car with a price of $25,000? If the former, do not buy. If the latter, do buy.

    That said, I really would much much rather compare prices in my pajamas on my laptop than go to a dealer.

  • avatar
    ronin

    BDB : >>Buying a car is the second biggest purchase in your life.

    Maybe third. Your purchase of government will be bigger, as measured in taxes paid all through your life.

  • avatar
    CarPerson

    WOW! JUST WOW!

    So the end-all, be-all, buying a car or truck is did you pay less than anyone else???

    There are at least a dozen ways to determine a narrow range at the bottom of what to expect to pay before you go in. Did you hit in that range?

    If so, move on and be happy with your new purchase. Measuring victory in what you paid instead of what you bought is ridiculous.

    Besides, you are trying to measure something that is very much a moving target.

  • avatar
    ronin

    >>>”…There is certainly a point at which its just not worth your time, especially when in most cases 1k is less then 20 bucks a month when you are financing. Enjoy it and focus on …”

    Since your retail purchase is after tax, you had to earn at least 1.5k for it. Since you are financing, you will need to have earned probably closer to 2 or 2.5k.

    I would much rather give that money to my kids than to a stranger’s kids. (That stranger, of course, feels the same way).

    And that is why I fight for the absolute best deal, down to the last $100.

  • avatar
    lzaffuto

    I am not opposed to the dealership making a profit off of me. After all, he has to work for the same reasons I do, why do I deserve money but not him?

    But here’s the thing:

    1. There aren’t enough customers like me. Most people want the dealership to sell the car to them at a loss.

    2. There aren’t enough honest dealerships/salespeople. Most of them want to rake the customer over the coals for every cent they can get.

    So what really ruins the car buying process? Greed and unrealistic expectations, on both sides.

  • avatar
    findude

    Funny, I just now got back from looking at a new car at a dealer. No pressure. The salesman asked if I wanted to test drive, but I said no as I was a bit rushed and that I just wanted to sit in it to get an idea how comfortable it was, appreciate the visibility, etc. Seeing my interest, he again offered a test drive. I decided I could swing another fifteen minutes so I did take one. I was reasonably impressed with the car (a Honda Fit Sport) and will look at them seriously when I’m ready to buy in a couple of months.

    I live in an urban area with lots of dealers (autotrader says there are 336 Honda Fits within 25 miles of my ZIP Code), when I’m ready to buy I’ll kick back on the couch with my laptop and have at it. I’ll spend some time on the phone with dealers I think I want to work with (there is one local megadealer dealer I won’t do business with due to a bad experience I had there in 1988–yes, I remember and, no, they will not get my business). I will not commit on whether I’m financing or paying cash, but I will have a rate from my local bank in my head–I’ll probably end up paying cash anyway, but they don’t need to know that up front. When I sit down at the dealership, I will already know everything I need to know and we will just be signing papers.

    I’ll have a reasonable confidence that I got the best deal I can get.

    Yes, dealers suck, but the internet has changed everything. I knew much more about the car I drove today than the salesman who helped me.

  • avatar
    Pch101

    I’m not a fan of car dealers. Also, I tend to subscribe to the general business philosophy of the customer being right, i.e. that a business that endeavors to please the customer will generally be the one that gets the most business.

    Still, I think that this op-ed suffers from some severe disconnect. It strikes me that the author wants all of the benefits of negotiation, but none of the associated costs, such as doing the homework that it entails. He wants to get the lowest price, even though he hasn’t invested the effort that is required to get the lowest price in a negotiated setting.

    Negotiation is a proactive process. If you want to do well with it, then you need to your homework and learn enough about the process to game it. That’s just the price of admission.

    If you can’t hang with that, for whatever reason, then take the no-haggle approach — pay what’s on the window. Or, in the alternative, find a third party such as a broker or retail intermediary such as Costco to get you some price that is most likely below sticker but more than what the best negotiator would pay on his own.

    Once you’ve decided to haggle, you have to accept the responsibility that goes with that decision. You can’t complain just because the guy who is playing for the other side isn’t helping you to reduce his own margins.

    In a price negotiation, the opposing parties don’t usually start on the same page. And if they did agree, then it wouldn’t be much of a negotiation, now would it?

  • avatar
    Colinpolyps

    Hopefully this massive shaking of the tree i.e. the bailout will lead to some massive changes in the distribution system of cars. Obviously this outdated model of pricing etc does not sit well with the consumer.

    Back just before autos there were horse traders and they were the most untrustworthy souls to deal with.
    Along came cars and who became the sales agents? Horse traders and the reputation has carried on ever since.

    A company store showroom for the models staffed by salaried personell to me would be ideal. Delivery would be through a warranty service outlet and their profit would be a set rate per car.
    A one price for all tag would then work as I see it. The myriad of options would be priced similary and the banks would be the financing arm.
    Three distinct stages.
    Want to not finance fine skip step 3. Want no warranty you can have that too. Skip step 2 and with a lot of today’s vehicles and knowing how long you want a car would determine if you wish to take the gamble on no warranty. Hell we do it now with used cars.

    Predetermined priced trade-ins all go to auction and independant used dealers buy them up. There it becomes everyman for himself as it is now in the used market.

    Now to buy out the current system is the bugbear. The government has made unfair laws before. Rescind all franchise agreements.

    Flawed perhaps but how flawed is our present system?

  • avatar
    rottenbob

    How much does your grocer pay for a box of Cheerios?

    Doesn’t matter. Your grocer isn’t trying to sell 20 boxes of cereal to 20 different customers for 20 different prices. All 20 customers pay the same price.

    A car dealership is different. The dealer will sell the same model car, optioned identically, to multiple buyers at a wide range of price points. This leaves a lot of people wondering if they got a good deal or if they got ripped off.

  • avatar
    Gottleib

    what you pay for your car is simple compared to what you pay for a simple heart by-pass operation, of course maybe the by-pass operation would be less expensive had the Porsche dealer not screwed over the surgeon and the hospital administrator.

  • avatar
    wsn

    nonce said:
    Too many people here are defining their happiness in terms of other people.
    “I can’t be happy if someone else got a better deal.”
    Here’s the question: is it a good deal for you? Would you rather have this $25,000 in cash or this car with a price of $25,000? If the former, do not buy. If the latter, do buy.

    You didn’t get it.

    Right now the world population is growing at 2% per year, which is not sustainable. The upper limit on population is determined by the total mass of the earth (or the solar system, or the universe). No matter how you model it, it’s inevitable that someday the population would be drastically reduce either by famine or warfare.

    If you pay more of a price for everything than your peers, the result will be that there will be less resources left for your offspring. You genes, as a percentage of the gene pool, will diminish, and quite possibly go extinct on that judgment day.

  • avatar
    powdermonkey

    As others have pointed out the real reason most people are so sick of car dealers is the lack of transparency on the price they paid or will pay when the transaction is done. The major problem with that is the “Moving Target” @carperson talked about.

    The general public has no idea what the real cost to the dealer is, they have no idea what the rebates, holdback, special deals, volume discounts, or whatever else lowers the price to the dealer.

    That makes the buyer nervous, they know that they don’t know what the dealer is paying, and they suspect that others are doing better than them. When you are talking about a purchase in the thousands of dollars that is disconcerting.

    I have purchased 2 new cars, one I got a great deal. The other I thought I got a great deal. I purchased the car on a Friday afternoon. Signing the final paperwork after 10:00pm. I had done my research, had quotes from 5 dealers in the area and the price I was paying was $100 lower than edmunds. Great deal huh? Then I got into my new car the next morning and while driving around thinking I was the king of the world I hear a radio ad from the same dealer for the same model car I was driving, (one with no real options) quoting a price $2000 less than I paid just over 12 hours before.

    Do all you dealer types see why your customers don’t trust you? Do you see why they walk in thinking “I’m gona get screwed here” do you see why they really don’t care if you make money on the car that you sell them.

    You, as a group have made it perfectly clear that we are all suckers to be skinned. Rubes to be scammed for every dollar you can. Don’t complain when we treat you the same way.

  • avatar

    @DaveM “If everything goes through painlessly” – Big “if” there. And that’s the problem.

    @nemovosseducat “You NEED us on that wall! You WANT us on that wall!” – Ha! Very nice. I disagree, but still, very nice.

    @CarPerson “Besides, you are trying to measure something that is very much a moving target.” – That’s kinda my point.

    @lzaffuto “After all, he has to work for the same reasons I do, why do I deserve money but not him?” – Because it’s your money, man!

    @Pch101 “He wants to get the lowest price, even though he hasn’t invested the effort that is required to get the lowest price in a negotiated setting.” – Why are you assuming I haven’t put in the effort. I try to learn about “sticker price, invoice price, dealer add-ons, incentives, rebates, discounts, hold backs, various employee/college grad/military/loyalty/your mama cash backs, weekly/monthly/yearly manufacturer-to-dealer quota deals” and then try to keep up with these on a monthly, weekly and sometimes (3-day weekend-ly) basis. What’s worrisome to me is what I don’t know about that could save me money.

  • avatar
    Pch101

    Your grocer isn’t trying to sell 20 boxes of cereal to 20 different customers for 20 different prices. All 20 customers pay the same price.

    It cuts both ways. In a supermarket, the customer doesn’t mind paying the sticker price.

    At a car dealership, most customers want “the best deal.” But by definition, not everyone can get the “best deal” at a dealership that cuts different deals with each buyer. The exception of sorts is a one-price dealership; however, in that case, no one is doing better (or worse) than anyone else, which provides no bragging rights to the buyer.

    For the most part, dealerships don’t do well with the one-price model because customers aspire to do better than one another. Many buyers may not be particularly good at it, but they like the idea of outperforming each other, and will put themselves into a negotiation in their efforts to try.

    I have no problem with that, but if someone wants to kick everyone’s ass AND doesn’t expect to work for it, then he’s just being lazy. Negotiation doesn’t work that way, and a negotiator has to anticipate the possibility that his opponent might not just play to win, but might also be good at it.

  • avatar
    rdodger

    Last I knew, profit was not a dirty word. Every salesperson wants to make a living and he/she does what they are told by their boss to make it. Some do it honestly and some not so honest. We do business where I work very upfront and our customers are pretty pleased with us and that’s why they come back and purchase again. It’s not all about the price but with the service that customers get. I think most people just want to be treated well and taken care of in an honest way. Unfortunately, there are many that do it badly and could care less if that customer comes back again. It’s just my opinion tho.

  • avatar

    newsflash! the sun rises in the east! which is about as astonishing as the notion that car salespeople (actually any kind of sales critter) suck …

  • avatar
    nonce

    Men are too competitive:
    Economists recently tried to find out in an experiment in Pittsburgh by paying men and women to add up five numbers in their heads. At first they worked individually, doing as many sums as they could in five minutes and receiving 50 cents for each correct answer. Then they competed in four-person tournaments, with the winner getting $2 per correct answer and the losers getting nothing.

    On average, the women made as much as the men under either system. But when they were offered a choice for the next round – take the piece rate or compete in a tournament – most women declined to compete, even the ones who had done the best in the earlier rounds. Most men chose the tournament, even the ones who had done the worst.
    And so men keep on trying to beat each other on buying a car, just pushing up the costs of cars for everyone.

    I’m glad for my family budget that most groceries are bought by women and priced accordingly.

  • avatar
    Patrickj

    If anything, the author has understated the case of how much car dealers suck.

  • avatar
    Subifreak

    As George Carlin once said “Calm down…..have some dip”

    Now, I think you should just take public transportation from now on.

  • avatar

    @rdodger – profit is a dirty word when matters are arranged (again, through dealer-sponsored state legislation or the multitude of pricing schemes, for example) to make it harder for the buyer to know if they got a good deal.

    @bloodnok – I should have title the piece, “Water is Wet, Grass is Green, Dealers Suck.”

  • avatar

    @Subifreak – ‘Now, I think you should just take public transportation from now on.” – And give up my manual transmission 2007 Subaru Outback 2.5i Basic? Are you insane?

  • avatar
    AdamYYZ

    The financing guy at Honda told me I might not get accepted for a loan without rustproofing. He said “They see it as you will protect their investment”

    Yikes!

  • avatar
    Point Given

    Aren’t dealers entitled to make a profit, too? Absolutely not.

    - That line just chokes me Marcus. Profit is why we do almost everything we do (even in frosty Canada)

    I accept that the retailer I buy my clothes from has them marked up 40%, I know the home builder that built my place marked it up 20%. The leather couch I bought was probably marked up 100%, The dollar store I used to own marked things up 40%.

    I accept people earning a profit off of me. It’s implied in all business transactions, it’s what makes the economy go round.Grocery stores, gas stations…everything. I accept that if I purchase a product or service from you that you’ll make money on it why can’t we make money off of you selling you a car?

    I’m not talking about the scummy side of the business, the rust proofing, protection package, extended warranty stuff. I’m talking the selling you a car for 22,500 that I paid 20,000 for. Where’s the problem?

  • avatar
    nudave

    Here’s a hint Marcus – if you paid MSRP, or even more, for a great car that you like, from a reputable dealer, you got a good deal.

    If you bought a POS from a crummy dealer, even WAY below invoice, you got screwed.

    However (here’s the catch), since it was your decision to make, you – not the dealer – bear the personal responsibility for your decision. That’s called “accountability”.

    Could it be you’re simply pissed off because you have no on else to blame?

  • avatar
    Point Given

    Hahahah. here here nudave!

  • avatar

    There is no other product of which I am aware that has a dedicated structure to try to pry as much money as possible out of an individual buyer for a given product.

    Not Real Estate, where each parcel is unique.

    Not consumer electronics, where there is a price posted, with some wiggle room.

    Only with a car will five people go to buy it and come away with five prices for the same item in the same place.

    That’s why going to the dealer is just slightly better than minor surgery.

  • avatar

    @Point Given – No one is entitled to a profit. You earn it.

    @nudave – “if you paid MSRP, or even more, for a great car that you like, from a reputable dealer, you got a good deal.” You have a very unique idea of what a good deal is.

  • avatar
    Landcrusher

    Marcus,
    You make several good points, but I knew all that. Granted, it was an entertaining read, but you didn’t tell me anything I didn’t already know. If you want the prize, how about suggesting how we do it differently.

    PS. Don’t fall into any of the traps that eliminate the trade in process, because most new deals have a trade in. No-haggle pricing is a scam that should be outlawed be any consumer friendly state as a deceptive advertising gimmick.

  • avatar
    fincar1

    TVC15, you make a very good point. Car dealers do have a lot of infrastructure to pay for, and not much choice as to whether or not to have most of it. This, to me, is why so much “consumer protection” talk and legislation is baloney. The consumer wants to be able to walk up and buy a car, a sweater, or a cart full of groceries, with no thought for the infrastructure that’s necessary on the seller’s part. Wouldn’t you think the consumer would at least figure out that the seller has to plan to make some money to pay for all this stuff and a little to keep too?

    I don’t like to shop – I’d just as soon go to a store, buy what I want, and get on with my day. So I don’t think much of the car buying process because it takes a lot of time, even while I realize it should take some time, because it’s a lot of money I’m planning to tie up. So I’m just not going to take the time to go for an additional price reduction which will make absolutely no difference to me over the life of the car.

  • avatar
    BDB

    @spitfire

    Kick ass! Did you get employee pricing to the power of 10? How was the atmosphere at the Jeep dealership?

    “Maybe third. Your purchase of government will be bigger, as measured in taxes paid all through your life.”

    Well, seeing that I went to public schools from kindergarten right up to my Masters degree I’ve probably taken as good as I paid. At least I like to think so! :P

    (Plus I work for the Govt.)

  • avatar

    @ Landcrusher “You make several good points” – Thank you. “but I knew all that.” – Preaching to the choir. Granted, it was an entertaining read” – Thank you. “but you didn’t tell me anything I didn’t already know.” – If you would open up your songbook to page 124… “If you want the prize, how about suggesting how we do it differently.” – I’ll work on it.

  • avatar
    Dynamic88

    The term “dealer” means just that – he’ll make a deal with you. It’s a given that different people will get different deals. They have different needs, different wants, different time frames in which to buy, different trades.

    If you want to get mad about what people make, get mad at Realtors. 7% for showing the house and doing some routine paperwork? Absurd!

  • avatar
    BDB

    What if they paid the salesmen a flat salary rather than on commission to reduce the pressure? Or at least a minimum salary + commission? I can imagine if in my job the choice was between bilking a customer or paying the bills/eating, I’d do shady stuff too.

  • avatar
    gslippy

    This is why all auto manufacturer should go to ‘no-hassle’ pricing. No rebates, kickbacks, or gimmicks.

    Then you simply negotiate over the trade-in.

    Scion and Saturn do it; why not everyone else?

  • avatar
    cjdumm

    Whoever compared car sales to buying a house is full of beans. They should be sold like TVs or law mowers, or any other mass-produced consumer good.

    Cars are mass-produced by the millions. Houses are not. Cars last 10 to 15 years before most are clunkers. My aunt’s house is over 300 years old. Cars depreciate rapidly, but houses gain value over time. We have no idea how much a dealer paid for a car, or how much they pay on commissions, but we can look up the previous selling price of any real property at the county clerk’s office. And we always know how much each real estate agent’s commission is.

    The worst thing is, we don’t even know the real selling price of a car until we’ve spent at least a few hours haggling over it. If every dealer had no-haggle pricing we could compare them easily and transparently (as though they were plasma TVs) and simply buy at the best price.

    In economic terms, the car market is ‘inefficient’ because nothing is transparent. Buyers cannot easily compare one car’s price to that of another model, or even to that of an identical car at a different dealer. Obfuscated prices, hidden incentives, secret costs and outright dishonesty mean that one buyer can pay thousands less for the same car than the buyer in the next sales stall.

    This makes no sense, unless you’re a dealer, and there’s no reason for it, except the stupid profligation of contracts and franchise laws that protects the broken dealership system.

  • avatar
    Landcrusher

    No haggle is a trick. Most deals have a trade and no haggle becomes haggle.

    No commission fails because it turns into a “turnover shop” where you can’t get a competitive deal without being turned over to a high powered negotiator who has a commission or other profit sensitive comp plan. The other way to do no commission is to disguise it as something else using quotas or other metrics where poor performers are simply fired.

  • avatar

    I haven’t bought many new cars, but when I have I’ve told the salesman that I didn’t want to bullshit around and waste his time or my time so if he’d just give me his best out the door price I’ll either buy it or be on my way.

  • avatar
    Demetri

    As someone who has obsessive-compulsive tendencies, I completely agree. No matter what deal I get, I feel like I’ve been screwed over because someone else probably got the same thing for less. And if you push too hard on price, the salesperson feels like you’re a pr1ck. That’s why I always go to a different salesperson each time. If you get too friendly, they’re going to expect you to pay more to help them out.

  • avatar
    dwford

    “Your grocer isn’t trying to sell 20 boxes of cereal to 20 different customers for 20 different prices. All 20 customers pay the same price.”

    Not true. Are you aware that most retailers competitive shop their local competitors and adjust prices accordingly? If you live in a small town with little retail competition, you are likely paying more than in the same store in a more competitive market. Unless you take the time and go from Wal-Mart to Wal-Mart you won’t know that, but it’s true.

  • avatar
    Bridge2far

    I guess it depends on the buyer’s goal. If you want the best value and shop around the odds are you will achieve that goal. If your goal is to make sure the dealer makes no money, you will most likely always be disappointed. I’ve heard many salespeople marvel that the customers they make the most gross profit on are usually happy and easy to deal with. On the other hand, the minimum commission “grinder” is never happy and usually delivers a low CSI score. Which one are you?

  • avatar
    Bridge2far

    …and let us not forget that the consumer has the option to walk away from any presented deal. That’s right. You have a choice! Oh, this terrible capitalist free market thing is special!

  • avatar
    dwford

    “I’ve heard many salespeople marvel that the customers they make the most gross profit on are usually happy and easy to deal with. On the other hand, the minimum commission “grinder” is never happy and usually delivers a low CSI score. Which one are you?”

    True that.

  • avatar
    PeteMoran

    As the Governor of California once said “Relax, you’ll live longer”.

    Service, quality and a relationship is worth paying for. Those companies that get that will typically have higher margin, stronger balance sheets, loyal workers/customers and PROFIT.

    Wow, what a strange way to behave.

    Car dealers are no more or less obvious an example of good/bad business than anything else.

    If you want everything cheap/crappy, be prepared to have everything that was previously quality/high-value made overseas or provided from low-cost countries.

    Walmart everything USA; you know it works…..

  • avatar
    Dangerous Dave

    My ideal car purchase experience would be:

    No haggle price

    Pay me blue book trade-in value for my trade

    Base my intrest rate on my credit score if i’m financing

    Offer me all the add on crap like warranties, which of course I’ll refuse.

    Send me on my way in under an hour.

  • avatar
    dwford

    @Dangerous Dave: I’ll give you KBB trade for your car if you give me KBB retail for mine! No? You can get it cheaper somewhere else?? Oh, well so can I – at the auction. Thanks anyway…

  • avatar
    Landcrusher

    Why doesn’t anyone get it?!

    Without thosands of people out there haggling, There can be no bluebook. No haggle is a pipe dream, can’t happen, doesn’t happen, and is nonsense until cars are only bought once!

    GET OVER IT

  • avatar

    @Bridge2far “I’ve heard many salespeople marvel that the customers they make the most gross profit on are usually happy and easy to deal with. On the other hand, the minimum commission “grinder” is never happy and usually delivers a low CSI score.”

    so my choice is either happy schmuck or depressed scrooge? i’ll take door number 3, bob.

  • avatar
    Flipper

    I’d also say a real issue is after all the dealing is done they then hand you their contract and poof there is a $299 Doc fee And/or a $399 paint protector, oh yeah and don’t forget the advertising fee too!all which = post saleprice pure profit to the dealer. When I go shopping for a new car in may, the first thing I’ll do is ask to see a blank contract.

  • avatar
    highrpm

    For all the folks here that are feeling taken by their dealerships, I have one piece of advice for you – do not buy a new car.

    Look at the huge numbers of lightly used cars out there. The prices are much lower on a car with 5,000 miles than a brand new one, although that used car will smell and drive new. There are no hidden extras or incentives on a new car.

    You can then brag about how you paid much less for your practically new car than your buddies did for their zero-mile cars which probably have 5,000 on the clock by now.

  • avatar
    Bridge2far

    “so my choice is either happy schmuck or depressed scrooge? i’ll take door number 3, bob.”

    Now you finally get it! It’s a personality thing. Some folks are never happy and walk around with a scowl on their face. Others are personable and friendly and have a better outlook on life. These traits transcend everyday life. Be happy!

  • avatar
    rpol35

    Caveat Emptor!

    It’s just a game, sometimes you get the bear and sometimes the bear gets you.

  • avatar

    @highrpm “For all the folks here that are feeling taken by their dealerships, I have one piece of advice for you – do not buy a new car.” – Used cars are even harder to get a deal on. Cheaper, but harder to get a deal on.

    @Bridge2far – I’m not sure how I finally get it, so I guess either I already done got it or I never done got it good. You seem to see me as a curmudgeon when all I want is to be fiscally responsible (no, I’m not running for office) and get a good deal on a new car.

  • avatar
    bryanska

    “Between sticker price, invoice price, dealer add-ons, incentives, rebates, discounts, hold backs, various employee/college grad/military/loyalty/your mama cash backs, weekly/monthly/yearly manufacturer-to-dealer quota deals and the other probable dozen or so on-again, off-again programs of which I have no knowledge, trying to make a good deal with a car dealer is a bit like trying to make a good deal with the devil himself.”

    Satellite TV companies are the EXACT same way. over the course of a phone call, so many deals and packages are thrown at you, eventually the pricing makes no sense at all.

    I buy cable TV because the price is firm, even though it’s three times as much as satellite. I just don’t trust the satellite companies – foer the same reasons in the editorial.

  • avatar
    thalter

    I can’t believe I am saying this, but Marcus, you actually got me to side up with the car dealers on this one (and trust me, I hate car dealers).

    You were already on shaky ground with your anti-capitalist no-profit allowed rant, but your recent comments really pushed me over the edge.

    What you are asking for is not only unreasonable, but it is mathematically impossible.

    You want to walk in to a car dealer, and get a good deal right away. If we define a good deal as one that is better than what at least 51% of other customers got, then this is physically impossible. Because this is the deal they must offer to everyone who walks in the door (not just you), it can’t possibly be better than what a majority of people are paying.

    Or as others have already pointed out, you want the benefits of negotiation without the negotiation.

    Or perhaps you want them to offer their best deal only to you, and screw everyone else. In this case, you are exceptionally selfish and anti-social. And yet, without a hit of irony, you deplore dealers when they act in their own self-interest.

    It sounds like what you want instead is a fair deal, in which everyone pays the same price, and no one gets a better deal than the other. This could mean no haggle pricing, but as long as there is even one dealer who is willing to lower the price by even one dollar, then you won’t seem to be satisfied.

    So to enforce the no-haggle price, we now need price controls, either from the manufacturer or the government. Now that dealers aren’t allowed to “deal” or compete on price, then there is no need for rebates, incentives, holdbacks, sales, or any other sales drivers. And if the market is no longer allowed to set the price, who does? Our friends, the dealers and manufacturers.

  • avatar
    zenith

    Buy my car from a “big box” store?

    So, 91 days after the car I bought at Target or WallyWorld has a problem, I’m told, “We don’t service. We only give refunds/exchanges for 90 days following purchase. Since it’s been 91 days, you’ll have to find a service center for that brand.”

    Precisely how is this better than, “Bring ‘er in. We’ll have our next available mechanic on it.”?

    Is WallyWorld gonna give you a shuttle service to work or a loaner car/rock-bottom priced rental if you have to leave the car overnight?

    Will DIY people get parts other than “TBA” stuff for their from the Big Box?

    How about body shop services?

    As bad as some car salesmen can be. Can they not be compared favorably to the the typical minimum wage guy who worked in the stockroom last week and only took the car sales job so he could chat up chicks?

  • avatar
    McDoughnut

    I think that we may be missing the big picture here….

    When I think of how Dealers Suck – what comes to mind is that a 70 year old business model has fundamentally broken down – leading to all the abuses so ably documented above.

    Is selling cars at WalMart, Albertson’s, Macy’s, the internet a good idea – who knows!? But, if they want to spend their money trying it out they should be allowed to do so. If it’s a good idea they’ll be profitable – if not, they take a loss. Why are we bothering to argue the minutia?

    What should concern everyone – on both sides of the fence – is that dealers have used their political influence to limit competition and the power of government to unjustly protect themselves.

    Healthy and dynamic economies can not be sustained by this type of domestic protectionism.

  • avatar
    Dave Ruddell

    @speedlaw:

    Only with a car will five people go to buy it and come away with five prices for the same item in the same place.

    I think an argument could also be made for airline tickets.

  • avatar
    Landcrusher

    McDoughnut,

    Very close, 2 points.

    You missed out on the legislature’s actual incentive to go along. Import taxes are not allowed on interstate commerce. However, the state legislatures were not going to let all that money go back to Detroit without tring to get a piece. They wrote these laws because the dealer franchise laws allow them to essentially force the manufacturers to bring much of their business activity into the state so that it can then be taxed. It’s inefficient, costs the taxpayers of the state more than it costs Detroit (TINSTAAFL), and is mostly a bad idea overall. HOWEVER, it doesn’t look like a tax, and allows the legislators to get into more cookie jars.

    IOW, the conspiracy against the consumer is not just among the dealer groups, they have the legislature in on the plan. Instead of protecting your interest, they tricked you into thinking the state was getting consumer protection and money for nothing.

    “No man’s property is safe while the legislature is in session.” I don’t know who said that, but it was on the wall in my shool headmaster’s office.

  • avatar
    claudster

    Buying a car sucks, but servicing it at the dealership sucks even more.

    Having the service manager doing his best to deny a warrenty claim on very vague technicalities, only to have him get angy and mutter “OK!!You read the book andwe’ll do it just this once!” after the warrenty manual is presented and the proper page is quoted from sucks.

    listening to the service writer pushing the “dealer recomended service” (change spark plugs every 15K Km instead of the required 150K Km)sucks.

    The sleezy-slimy salesman is only dealt with once, but the service department is dealt with on an ongoing basis.

    It would b nice to see an editorial outlining the shenanigans that go on within the service department.

  • avatar

    @thalter “You were already on shaky ground with your anti-capitalist no-profit allowed rant” – *Le sigh* I stated they weren’t entitled to a profit. No one is entitled to a profit in a capitalist society, comrade.

    And I define a good deal (in part) as one where I do not have to trust the person selling me the merchandise that I got a good deal.

    “Or perhaps you want them to offer their best deal only to you, and screw everyone else. In this case, you are exceptionally selfish and anti-social.” – Of course I want a good deal for me, again, is that anti-capitalist?

    “And if the market is no longer allowed to set the price, who does? “ – Interesting you think the auto market is a capitalist, free market based.

  • avatar
    dwford

    “Or perhaps you want them to offer their best deal only to you, and screw everyone else. In this case, you are exceptionally selfish and anti-social. And yet, without a hit of irony, you deplore dealers when they act in their own self-interest.”

    I had a customer come in yesterday, and engineer. He had bought 2 vehicles from us previously, and showed my his nice charts showing how he bought both cars for invoice-holdback. He has a similar number in mind on a new 09 Sonata. He then picks out one with the sunroof package, which stickers for $2000 more than the one he worked his ideal numbers on. Playing along and using his numbers, I work up a invoice-holdback deal on the sunroof car, which – surprise, surprise, comes out $2000 more than the base car. With a straight face he says that is too much, and he will pay $500 more for the sunroof car than the base car, despite the $2000 price difference. I tell him no, and he is shocked! After all, he is a “loyal” customer who bought 2 other cars from us!

    Let’s see, you let us make no money on 2 previous cars, and now as a loyal customer, you want us to lose $1500 to “earn” your business one more time??? What’s the word I am looking for… oh yes, NO!

    Sometimes saying no is really fun.

  • avatar
    TxTransplant

    The destitute auto manufacturers formerly known as the “Big Three” should pay heed to Mr. Topia’s editorial. If the publicly recognized face of your company is a car salesman, you are most certainly doomed to failure.

  • avatar
    dhanson865

    As many above have stated. Cars are not comparable to bananas, chips or even TVs.

    OK, but they are like computers.

    1. I can go to Dell.com and buy a mediocre computer and have it shipped to me.

    2. I can go to Dell.com and configure a computer with optional components and they’ll still ship it to me just like in #1 above.

    3. I can go to just about any car manufacturers web site and configure a car just like I can configure a computer at Dell.com

    4. I can actually order a configured car from Saturn.com and have it delivered.

    5. Why can’t I just get the pricing from Toyota, Honda, or Ford to be as straight forward as it is from Saturn or Dell?

    and for the record I’m no great fan of Dell. They are not a great company or even a good company. They are an OK company that is on the verge of needing their own deathwatch series on a computer related website.

    My point is the computer industry has model redesigns, upgrades, options, and so on in very similar fashion to the car industry. How different is Best Buy from Autozone or Advance Auto Parts?

    There are a lot of problem companies out there but the car dealership industry would be improved greatly if it were brought up to the craptacular level of one of the companies in another sector.

    I was all over the map on that one but there it is…

  • avatar

    @dwford “Let’s see, you let us make no money on 2 previous cars, and now as a loyal customer, you want us to lose $1500 to “earn” your business one more time??? What’s the word I am looking for… oh yes, NO!” – and if it were, perhaps, the end of the week/month/year/holiday and there was a beaucoup manufacturer performance/volume bonus on the line might you have taken the $1500 hit to get that dirty, filthy manufacturer largess?

  • avatar
    Landcrusher

    dhanson,
    Dell only does that model on disposable type products. If you want to buy high dollar servers from HP or Sun you can get a better deal, and trade in your old server through one of their resellers.

    Sorry, but ignoring trade-ins is being silly. For folks who want the model you describe, there are services that get you abfaor deal with no hassle already.

  • avatar
    dwford

    @Marcus Topia:

    Maybe. But as a salesman that’s not my call. Given the low spread between invoice and MSRP on the almost all the Hyundais I sell, even a full sticker deal is a mini for me, so I really don’t care what the selling price is. I do have a pretty good idea of what the selling price COULD be, and this particular customer was way off that mark. If my manager had said yes, of course I would have written the deal.

    I guess the point for me was that the customer was dead serious that even though the store had never made a dime off him, he should be given special consideration as a “loyal customer.”

    It’s kind of like the shoplifter getting caught in Wal-Mart, and telling the manager that he should let him go because he shops there every week.

  • avatar

    @dwford – “I do have a pretty good idea of what the selling price COULD be, and this particular customer was way off that mark.” – But he didn’t know that, even after all his research and charting, because he doesn’t know when there’s no more wiggle room – even if you’re being completely honest with him that there isn’t. Of course he was dead serious (although I certainly hope he wasn’t rude to you for not selling the car to him for what he thought was a good deal) in thinking he could get the car for less money as a repeat customer – because he didn’t know that you didn’t make a dime off him the first two times. And he definitely is not going to take your word for it.

  • avatar
    Bridge2far

    Yeah, I get a kick out of the “loyal” customer buying everything at or below cost. The dealer that continues to sell that way is an enabler. That customer invariably takes up everyone’s time. Interupts anyone he pleases because of his multi purchase status and absolutely demands to be treated above all others in the service dept. Fix this for free, that for free and oh yes I’ll need a loaner for the day while my car gets detailed. You know the pompous blowhard customer. My advice- lose him.

  • avatar
    dhanson865

    trade-ins?

    You mean when you buy a car you let the dealer screw you over with yet another variable in the transaction?

    Do you like playing 4 square?

    I thought the general consensus was that you sell your old vehicle as a separate transaction from buying a new one. I must have dreamed that…

  • avatar
    zenith

    Where are all of these “sleazy Detroit3 dealers”?

    In recent years I’ve been treated quite fairly by dealers representing all 3 of the Detroit makers, on both the sales and the service sides.

    I’ve never even had troubles with finance people.
    They did push “protection packages”, but took “No” for an answer without argument.When I bought the Aztek, the Pontiac guy actually admitted that I had 70K to go on my original factory corrosion warranty, albeit mentioning that their body shop was “quite competitive” with shops in the area should I keep the car past 90K or so and worry about “loss of protection”.

    Any troubles I’ve ever had were years ago with dealers that aren’t in business any more.

    So far as “Saint Toyota” goes, my son wanted an xB in 2006. The long-established Toyota dealer wanted nothing to do with him or his Cavalier trade-in.

    A mega dealer that started out as a Mopar shop gave him the best deal and the least ‘tude, so he bought from them.

  • avatar
    cleek

    @ MRL325i :

    Allah’s Ford Lincoln Mercury

    If there are any gearhead headchopping jihadis out there I would guess you might be hearing from them (or him).

    Unlikely. The Toyota Land Crusier is the official vehicle of Al-Qaeda. Explorers are chariots of the infidel.

  • avatar
    zerofoo

    Hail Marcus!

    Dealers do suck – especially the F&I guys at those dealerships.

    When I bought my Infiniti, I secured my own financing. When the I told the F&I guy the rate on my home-equity loan (and the fact that I could deduct the interest on the loan from my taxes), he started telling me I could get in trouble for using the money to buy a car.

    I told him that it’s a home-equity loan – my house is the collateral. I could spend the money on blow and hookers and the bank would not care as long as I made the payments.

    I said that line nice and loud in the showroom. He backed off after that.

    -ted

  • avatar
    Landcrusher

    dhanson,

    Yes, you can do better by selling your car yourself. No, the vast majority of people are not interested in doing that, and usually lose at least $1,000 for the luxury of not doing that work.

    Finally, if the average buyer is so set against haggling, how will they sell their own car? No haggle dealerships don’t reduce haggling, they increase it.

    GET OVER IT, it won’t work, and wouldn’t help if it did.

    I am not saying the present system is ideal, I am just saying you need to come up with a better plan that most of us haven’t heard yet.

  • avatar
    dwford

    Our loyal customer came back yesterday, picked a $100 cheaper car and bought – at exactly the same deal he walked on Wednesday. Somehow I am the jerk, though..

  • avatar

    @dwford – See? Even when you try and explain the deal it’s confusing. Is that $100 cheaper than the car he wanted to buy with the sunroof or the car that he had originally spec’d without the sunroof and was the deal the one that he originally wanted or the one you were willing to give him? So did he lose an extra $100 on the deal or make an extra $100 on the deal or did you lose the extra $100 on the deal or gain an extra $100 on the deal and did you lose money like you did in the first two deals with him and if so why’d you deal with him again?

  • avatar
    Landcrusher

    If you can’t stand the heat…

  • avatar

    …don’t touch the radiator cap?

  • avatar
    dwford

    @Marcus Topia:

    The customer wasn’t mine, I was helping another salesman who was off. The car the customer settled on was $100 cheaper on the sticker, so ended up being $100 cheaper out the door. the discount was exactly the same. Neither side benefited financially from him switching cars, he just saved $100 by buying something cheaper.

    It’s funny how something as simple as that can close a deal. The the grand scheme of the deal the $100 is meaningless, but it made some sort of difference to him.

    Deals are not always about the money, they can be about the perception of the deal.

  • avatar

    @dwford “the grand scheme of the deal the $100 is meaningless, but it made some sort of difference to him” – If it made a difference to him, it wasn’t meaningless. It was the difference between buying a 10 or 20 or 30 thousand dollar vehicle and not buying it.

    “Deals are not always about the money, they can be about the perception of the deal.” – If a person talks deal when they talk car buying, it always contains the element of money.

  • avatar
    Deepsouth

    dwFord, give it up. The author is bound and determined to have the last word. Period.

  • avatar
    golden2husky

    It would b nice to see an editorial outlining the shenanigans that go on within the service department.…

    How true. Many dealers will let a “marginal” sale go thru in hope of making it big time in the service department. While most people can gather enough information to get a decent deal, all bets are off in the service department. Very few customers, even those who are into cars, know much about the workings of a modern car. Ask your typical person why a car with a speed density fuel injection system doesn’t use a MAF sensor and you will get a blank look back. So, imagine how easy it is for a dishonest service department to bill you for parts that don’t need replacement. A few here, a few there, and your profits come quick. Well worth giving up a few hundred on the sales floor.

    Another scam is brainwashing customers that they must use “authorized” service centers for maintenance while under warranty. I know several people who were told that service other than by the dealership would result in warranty cancellation. These people invariably are the ones who get hit with extras in the name of “peace of mind.” I tried to convince them of the “Right to Repair”, but they were too afraid. Knowledge is your savior when it comes to protecting yourself – whether it is cars, health care, or *fill in the blank*. Do your research with an open mind and you will find yourself in better shape than most. Of course, everybody gets screwed hard w/o lubricant when you buy a home, pay for a wedding, or a funeral. These are three areas that even the most savvy person can’t escape the robber barrons that separate you from your cash and return nothing.

  • avatar

    @Deepsouth – The author is bound and determined to try and make his point. The author is bound and determined to discuss said points with those who would discuss opposing viewpoints with him. The author is bound and determined from here on out to stop referring to himself in the third person.

    I am neither bound nor determined to have the last word.

    Ever.

    Really.

    I’m not.

    Seriously.

  • avatar
    George B

    I don’t mind negotiating, but I hate the lack of transparency on extra fees and time wasting aspects of settling on a price. A friend had a reasonable buying experience where he did all the negotiating to buy a new Nissan Pathfinder using e-mail. He was able to skim over and ignore most the crap words from the salesman and copy/paste his position back using less of his time than dealing in voice. In addition, by buying from home, my friend had easy access to the internet with broadband and a full size screen plus food vs. limited information, hunger, and an uncomfortable chair in the sales booth.

  • avatar
    dwford

    I am not arguing with the author. I told a story, and just wanted to share the ending.

    As for hidden fees etc., most customers these days ask about the dealer conveyance fee, so I just show them the blank purchase order so they know everything up front.

  • avatar

    The author is right and the vast majority of the public (the non auto dealer, non autosales) agree with him. The laws have been put into place to not allow you to buy new cars from Walmart, Costco etc. We don’t have to buy samsung LCD tvs from the samsung store we don’t have to buy lays potato chips from the frito lay store. We can buy them from any store willing to sell them. Maybe we should just sell everything else like we do cars now and see how everybody feels. Everyday is a day at your local Kabaul market

  • avatar
    Qusus

    Yikes, I’m joining late in this discussion, but honestly, do car dealers suck that much? I haven’t really had any bad experiences, sure some dealers were jerks, but I figured it out and went somewhere else. I’ve never found the experience that painful. It’s not like buying groceries… but that’s only because I don’t buy 30K worth of groceries in one sitting.

  • avatar
    Sanman111

    Wow, I’m getting in late on this one. I haven’t read through all the comments, so excuse me if these points have already been made. There are a few things that I have yet to see brought up that I wanted to address.

    I think that the most similar thing that I have bought (process-wise) recently is a bed and furniture for my new apartment. I visited 12 different stores and got different prices for the same/similar products at each. Speak to a saleman and I got a second price. These prices varied several hundred dollars for what was sometime the same piece of furniture. I eventually went to a discount furniture store with the lowest prices that refused to negotiate. I ended up buying most of my furniture from them. The reason was simple: he price was reasonable and I didn’t need to fight with salespeople about pricing. Additionally, the run around and re-negotiation that occurs when I return to a store the second time can be a hassle. With cars all the same is true and deals go south all the time. The difference is that car dealers are often farther apart (distance wise) than other dealers due to franchise issues. Thus, I waste even more time and effort if a deal goes south. The internet has helped somewhat, but often I can get low-balled there to get me to come in and then have them try and re-negotiate there. The aggravation comes from the time and effort required to educate oneself to some degree.

  • avatar
    Landcrusher

    sanman,
    The time to educate yourself is just as important as the money you spend. Both of them are the same. Perhaps the discount store is a better deal, or not. You don’t know unless you shop. Part of the salesmans job is to name a price you will accept that is still profitable. I suggest you shop the discount store first, then try another store or two to negotiate a better deal or terms. Perhaps the discount store is beat, perhaps not.

  • avatar
    davey49

    I think as long as the car is good and you can afford it then whining about paying price x is just that, whining

  • avatar

    @davey49 – you got me beat. good on ya for being okay with buying a good car that you can afford for $10k over sticker without whining.


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