Wild Ass Rumor of the Day: Cash for Clunkers Salesmen Screwed?
As a former car salesman, I can tell you that relations between the front line troops and management is usually no better—often much worse—than the relationship between the dealership and its customers. To wit, this email just in:
I used to work at —– Toyota in —–. My friends working there told me that during cash for clunkers, —– cut the sales commisions on the cash for clunkers deals by “packing” the gross of the deal with a bogus internal charge to screw the sales reps out of money. Pretty pathetic. The dealers get a bailout, raise the prices on cars to the consumer, and cut the salesmans commission. You might see if this was an industry practice. PS. I work for CARMAX now and I love it. It’s like car sales heaven. Tom
More by Robert Farago
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Most dealers hold back some of the sales person's commission for a Christmas check and if you leave you don't get it. Its just another way of keeping people from leaving and screwing them out of money if they do. Some give their top producers a different pay plan to keep them, but most treat salesmen like crap. You almost have to be a sociopath to make in a fast track store.Its no wonder that people think of car dealers as crooks.
The last new vehicle I purchased was from a Penske dealership. The salesman showed me his commission check, $75! This was an end-of-year clearance deal "below invoice" so I dont know between the manufacturer and dealer how much profit was in it for the house. At least it was simple and we didnt have to spend more than an hour for the whole thing. Since I pay cash and dont buy extended warranties, alarms, et there was nothing for F&I in the deal, except the "documentation fee", which I assume goes mostly to the F&I lady. Tell me if it works that way or not.
The documentation fee is just additional profit to the dealership. Many dealerships structure the deals so the salesperson only earns a minimum commission and the profit is generated in the finance dept. thus in most cases non or minimally commissionable to the salesperson. Hence the reason for the churn and burn instability of salespeople and the resulting poor experience for customers. Not all dealerships operate this way but today I would say a majority do. They don't care about their salesforce or the poor experience their customers receive as a result. A major reason IMO why consumers consistently complain about the car buying experience. Overall, the dealership sales experience is decades behind the times, I know of no other retailer that could survive with such poor customer sales experiences especially for large ticket items.
Yes, the sales process is quite archaic. Anyhow, all but one of the dealers I regularly call on in my current position do not view F&I income as commissionable. The best dealership I consult for (and the only one I worked for in the past) views all profit, front- and back-end, to be commissionable gross after a $200 pack (new) or $500 pack (used). The doc fee is normally just profit to the store and isn't commissionable to a soul in the dealership, in my experience.