This pitch for a car sales seminar is based on one single assumption: car buyers today are better informed than ever before. Mr. Rodgers even raises the specter of 83-year-olds armed with information they found on the Internet, in hopes of convincing dealership sales staffs that it’s a whole new world out there. Of course the fact that car sales are at their worst levels in years probably helps his argument, but is it true? After all, as TTAC commenter Mike In Canada points out in our most recent Sebring/Avenger bashing post:
Here at TTAC we all love badmouthing these two hunks of junk (God knows I do). But, we are missing the trees for the forest.
Someone is actually buying these things….!
So there are still suckers born every minute, but on balance are car buyers better informed than they used to be? Is that coincidental to the car market’s recent downturn, or did one phenomenon cause the other? Personally, I don’t see a lot of “civilians” making particularly well-informed car-buying decisions because they usually believe a quick decision will be less stressful than taking the time to make the right decision. What are you seeing?
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There’s a butt for every seat at some price. We all know how much cash on the hood it takes to move the metal for some of these stinkers – and how long they sit on lots before someone comes along.
Do some people make stupid buying decisions? Sure. Others will defend their decision to the death because they were “supporting American workers” or “it was a good deal” or “I liked the styling”. I personally don’t think any amount of cash would convince me to buy a Sebring over, say, a nice base model Civic. But I’m not everybody. As long as the average selling price of the Sebring is less than the loaded cost of making the car, Chrysler’s in a world of hurt.
Tracking GM’s market share over the last thirty years will give you one answer.
Internet or not, I see lots of people flock to Toyota dealerships to buy another Corolla or Camry without even considering anything else.
It’s funny that you brought up the Sebring halfway through your post, because my first thought after reading the headline was, “No they aren’t, as otherwise nobody would be buying Sebrings and Aveos.”
this is researched to death. I’d love to read the proprietary research as to who buys what.
Look at the ad propaganda for any car. The folks there are the target market.
The situation with a lot of these sales trainers is that if they were any good at selling cars in the first place, they would still be doing that instead of trying to sell their seminars.
That being said, yes, of course, buyers do come in with more information these days, but the vast majority of it is about pricing, not about product. There is nothing wrong with an informed buyer, but ones that come in with incorrect or incomplete information are a major PITA. There are lots of websites where you can find a new car invoice, but all customers seem to find the invoice for the base model with no options, and expect to get the top trim level with all the toys for that price.
Kelly Blue Book is also a useful tool for getting an idea about the worth of a trade, but it isn’t the Bible, and market conditions do effect things. It is notoriously bad with values for high mileage vehicles.
We basically just tell the customer the way things are, and most understand that. If someone comes in with an advertised price from some dealer in the middle of Northwest Bumblefunk, WI and demands the same price we politely tell them they are welcome to buy that vehicle sight unseen, or pay for the plane ticket to go drive it, and gas or shipping to get it back to their home, or they can just pay the extra $500 that the market supports on the same vehicle here – reasonable people do just that.
From what I’ve seen, the answer is no. People today, outside of the enthusiast community on sites like this one, know very little about the cars they buy. Ask a typical person what engine they have under the hood. More than half will tell you whether it’s a four cylinder or V8, but most probably don’t know if it’s a 1.6L or 1.8L, how many cams, how many speeds in the transmission, etc.
I still remember a couple that came to look at a Boxster I was selling. Both were mechanical engineers. Both asked me where the engine was, considering that I showed them both front and rear trunks. Both were awed at the fact that it’s mid engined and that you could actually build a car like that. And these were engineers…
No sir, people today want a reliable car because they can no longer work on it. They trust Honda and Toyota blindly and will buy their cars without so much as a test drive. The first time I saw that, I was shocked. Until the day I was buying my wife’s Lex RX and also didn’t bother to test drive it. It had the Toyota name behind it and a good warranty. I knew how an SUV drove. Why bother with the test drive.
It is still the very rare customer that has done the research come up with accurate numbers for trade in value, selling price etc and just lays it out there. Most customers will come in with a Kelly Blue Book trade in value, “excellent” of course, but then proceed to come up with a totally make believe “internet” price for the car they are trying to buy.
Or the customer whole emails in for a price quote, but no matter what you quote, there is another dealer somewhere that has it for “$1000 less.” Yeah, ok.
But really, most customers just come in like they used to and hash it out. Many don’t even know what they came to look at. That’s how people end up in Sebrings.
“Someone is actually buying these things….!”
Budget, Dollar, and National.
NulloModo :
September 28th, 2009 at 9:01 pm
The situation with a lot of these sales trainers is that if they were any good at selling cars in the first place, they would still be doing that instead of trying to sell their seminars.
That being said, yes, of course, buyers do come in with more information these days, but the vast majority of it is about pricing, not about product. There is nothing wrong with an informed buyer, but ones that come in with incorrect or incomplete information are a major PITA. There are lots of websites where you can find a new car invoice, but all customers seem to find the invoice for the base model with no options, and expect to get the top trim level with all the toys for that price.
Kelly Blue Book is also a useful tool for getting an idea about the worth of a trade, but it isn’t the Bible, and market conditions do effect things. It is notoriously bad with values for high mileage vehicles.
We basically just tell the customer the way things are, and most understand that. If someone comes in with an advertised price from some dealer in the middle of Northwest Bumblefunk, WI and demands the same price we politely tell them they are welcome to buy that vehicle sight unseen, or pay for the plane ticket to go drive it, and gas or shipping to get it back to their home, or they can just pay the extra $500 that the market supports on the same vehicle here – reasonable people do just that.
No offense, NulloModo, but I’ve met one too many car salespeople who think exactly like you do (do they all think this way?), and I can tell you that if you haven’t accepted two basic propositions in the new era (same as the old era, but more so)…:
1) Price sells;
2) Customer is king;
….then I wish you the best of luck in navigating the waters that lay ahead.
Cars are commodities like washing machines or televisions; except they cost a lot more and depreciate much faster.
In a flat earth era of increasing competition for every consumer dollar, and a race to the bottom in terms of labor bidding for work, I feel a chill, and the swells are growing in size and frequency.
Look for the Chinese to make a bold, Korea like move within the next 7 to 10 years, and after that, who knows…
I’m not sure the majority of purchasers, regardless of the Internet research tools available, make best use of the information when making their selection, shopping and deal making.
The salesman does his shtick several times daily, buyers not so much. Few have well developed negotiating skills. Most are very uncomfortable with the process.
Two recent forays into the market assisting friends confirmed dealers are as crooked and deceitful as ever. I believe most buyers would be financially and psychologically better off if they recognized their limitations and engaged a buying service or broker.
ohsnapback – I am with you, I treat my customers well, and yes, price is important. You are also right in that cars are a commodity, and dealers are a businesses, just like appliance or electronics stores.
When I sold electronics the whole shopping via the internet thing was just starting to come of age. We’d have plenty of people come in with printouts from various web pages showing lower prices than our brick and mortar store, and while we would price match the reputable ones, when it came down to the fly by night operations showing prices that were too good to be true we just had to tell people that if they wanted to spend their money, plus shipping, on a product from some place they had never heard of with no chance to return the product if it didn’t work or it it didn’t meet their expectations, just to save a few bucks, that was their business. Some people did, but a lot bought from us instead.
It isn’t poor service to the customer to say no to a ridiculous offer or to show them where the information they got from the internet is wrong. Average mark up on a new vehicle is only around 6% to get to MSRP, which is a lot less of a margin than most other retailers operate with. The customer who wants to call and e-mail every dealer in town and nickel and dime everyone till he gets a car for $50 over triple net isn’t worth my trouble. I do not work for free, and I am not going to spend several hours selecting a vehicle, test driving, and haggling with someone just so that they can go down the street to the next dealer give them the price that they left with from us and get underbid by $100.
At the same time, I am more than willing to work with someone and help them find the right car for their needs, even if it takes all day, and negotiate to a fair price on the vehicle. My dealership has a policy that we do not give out pricing nor commit to figures unless the customer is also willing to commit to buying the car should we agree to numbers. Yes, we piss off some of the serial shoppers, but good riddance, and yes, some customers will make a commitment then back out on it, but for the most part, the system works, and it is fair to both the dealer and the customer.
There certainly is more information available to buyers today than their was in decades gone by. Some use it well, some use it poorly, some don’t want to be informed at all.
I do think that today it is much harder to sell a marginal vehicle than it was twenty or thirty years ago. GM sold 2.2 million copies of the Vega and it’s badge mates over an eight year period of time in the 1970s. Peak sales were almost half a million units in one year. I highly doubt such a marginal vehicle could do that kind of volume in North America today.
“My dealership has a policy that we do not give out pricing nor commit to figures unless the customer is also willing to commit to buying the car should we agree to numbers. Yes, we piss off some of the serial shoppers, but good riddance … ”
Yours sounds like just the kind of dealer I would walk away from in a heartbeat. Do you also put those “added dealer markup” stickers in the window? Those are another almost instant signal to walk for me. Counting our family and the various friends which ask for my help; I’m in the car market on average about once a year. I would never commit to make a purchase without FIRST knowing the price I was committing to.
In total agreement with John Horner’s last graph, last sentence. Commit to buying without knowing the price???!
Back in the old days, if you were buying a car, you could call you bank and find out what loan value was on a car. This would help you figure out what your trade-in was worth, and what the car you were buying was worth. I’m not really sure how much different that is compared to today.
As for “who buys a Sebring or Avenger or Aveo.” Well, think of it this way. Suppose you’re a Chrysler employee, retiree or related to one of the above. When it’s Thanksgiving, are you gonna show up behind the wheel of a Toyota? Not if you’re driving there. And if you flew there, you’ll luck out and rent a Sebring and somebody will offer you an extra helping of turkey.
Now, what if you’re employed by a supplier of a Chrysler. What are you going to drive to work?
If it was me, it would be a bicycle or a Vespa. Then everybody would think I was just eccentric and not blind stupid.
My dealership has a policy that we do not give out pricing nor commit to figures unless the customer is also willing to commit to buying the car should we agree to numbers.
While I’m sure that NulloModo can defend himself, I interpreted the bolded portion of his statement as meaning: “If all parties (the buyer, the salesperson and the management) agree on price and terms, you need to be willing to commit to buying the car. If you’re not willing to negotiate on this basis, then we see no point in being used as a negotiation tool for you to get a slightly lower price from another dealership.”
IMHO, a customer who is unwilling to agree to the principle of “if we all agree, then we have an agreement” is not negotiating in good faith.
Since I don’t currently have an Edit option to my above comment, I will add this note:
A customer who is up front about being willing to take a best offer from one dealership to the next is capable of negotiating in good faith. However, I would expect such a customer to at least agree that dealer #2 would need to offer a significantly better deal (say, $500+ better) for the good-faith principle not to apply. That way, the customer is at least agreeing not to “Mom said/Dad said” the two dealerships.
“If all parties (the buyer, the salesperson and the management) agree on price and terms, you need to be willing to commit to buying the car. If you’re not willing to negotiate on this basis, then we see no point in being used as a negotiation tool for you to get a slightly lower price from another dealership.”
Agreed. Some customers come in and flat out say that they just want a number to bring to other dealers. Depending on our mood, we will either point to the window sticker or give them a ridiculous lowball number we hope they don’t come back with.
We even have people come in and tell us what they think the price should be, and when we ask them if we can do that price will they buy today, they still say no! So you won’t take your own deal?!
2 questions usually sift the wheat from the chaff:
#1. Is this car a car you would like to own for the next several years?
#2. If the numbers work out, will you buy the car TODAY?
These 2 simple questions will flush out the buyers true objections to a purchase or let me know whether they are worth the time or not.
AuricTech has it exactly right. I would never expect a customer to commit to buying a vehicle without knowing the price, but rather to commit to give me the chance to earn their business right there if they have found the car they want and if I am able to get the figures in line such that everyone is OK with them.
I take pride in knowing the details and benefits of our products, in knowing how to demonstrate and explain them, and knowing how to teach a customer to take advantage of them should they make a purchase. There are plenty of salespeople at other Ford dealerships who don’t know how to set up a customer’s phone with Sync, or how to use the navigation system, or even where the jack is located on a 2009+ F150 Crew Cab (Ford did a great job hiding it). I take the time to learn these things, and take the time to make sure my customers make an informed purchase and get the vehicle that will fit their needs. It doesn’t take any knowledge or skill to cut price and shove someone in the cheapest vehicle of that kind on the lot, whether that will meet their requirements or not, and I hate losing sales to those who employ those tactics. I also find the idea that the only way to earn someone’s business is to reduce my own pay to next to nothing by cutting a deal to the bone. All retailers make a profit on their goods, and deserve to do so, car dealers are no different.
John – No, we don’t have added dealer markup stickers. We do nitrogen tire fills and pin stripes free of charge, and charge what is costs us for extras like bedliners, window tint, and aftermarket leather. My dealership has been in business for over 60 years, is family owned, and gives back consistently and considerably to the community. Our policies are not designed to screw customers, they are just there to promote a fair deal to both the customer and the dealer alike. Just as a buyer doesn’t want to pay thousands more than they have to, a dealer should be able to make more than $100 from selling a $40,000 product.
NulloModo :
My dealership has (1) been in business for over 60 years, (2) is family owned, and (3) gives back consistently and considerably to the community.
Numbers added by me for this reference:
1) How long you’ve been in business is mostly a non-issue for me. How long has GM been in business…and look what happened there! Maybe the newest “boss” is the worst. We’ver all seen that before!
2) I generally abhor nepotism because in my experience, it usually results in favoritism. So family-owned businesses aren’t necessarily a “good deal” for me the customer…and in some cases, they might make me even MORE apprehensive.
3) “Giving back to the community” comes from (or should come from) profits. In other words, it’s coming out of the markup that I’m paying. When any retail storefront makes a big deal about their donation level, then I must ask myself whether or not that markup might be artificially high so that the dealership/company/shop can feelgood/selfpromote.
My point in way too many words: I wouldn’t necessarily flee your dealership screaming, but to me these are not selling points, either.
People do not know how to appreciate or even notice good cars. They don’t give themselves a chance to look for something. People have low self esteem and are ashamed of making mistakes, that is my opinion about this.
“No, we don’t have added dealer markup stickers. We do nitrogen tire fills and pin stripes free of charge, and charge what is costs us for extras like bedliners, window tint, and aftermarket leather.”
It sounds like you are at one of the better dealers then. But I must say that as a buyer I hate the Will You Promise to Buy TODAY line.
The best buying experience I ever had was at the Volvo dealer in Austin, TX. I’m still sad to have moved away and thus to not have access to them. The salesman never used this “buy today” line on us. In return, I bought three cars from him over a four year period of time and sent several others there as well. When salesman start the sign on the dotted line today shtick it really ticks me off. Maybe the most appropriate and effective sales culture depends in part on the level of car being bought. The expectations of a new Volvo or Lexus customer are often different from those of the Dodge buyer.
NulloModo–
Your complaint about people doing the research at the nice store and then buying from the fly-by-night store is why the Supreme Court overturned the ban on manufacturers imposing minimum advertised prices on retailers. At first it seems like why would the manufacturer care if a retailer discounts, they’re still getting the same invoice price, so retailer discount means more profit.
But manufacturers and economists argued exactly as you did– some manufacturers want to maintain a premium brand, and have retailers and dealers that provide good service, showrooms, a chance to try out the merchandise, good advice, etc. But retailers won’t want to do that if the customer can come in, sample the wares, and then buy from the Internet or the fly-by-night guy.
I said yes when I just bought a car the other week, and got $1000 off his previous offer. I had talked to one other dealer, but didn’t like his attitude. The dealer I settled on is certainly a good one– I ordered a car, and he called me back later to tell me that one option I selected was included in another (I was trying to decide between the two), and that the price he gave me originally included both, so he was sending me a new bill of sale deducting the extra option cost. This is even though I had already agreed and signed on the other price. (And he did follow up on that; he faxed me the new contract and I signed and faxed it back to him.)
So he’s an honest car dealer. Being honest doesn’t mean that he’ll give me invoice price on a hot car, but I’ll still go back to him.
The page on resale price maintenance in Wikipedia has a discussion of the first issue.
I don’t agree with the ‘buy today’ statement or any pressure to buy or commit immediately. I ALWAYS want to sleep on a deal or price when it comes to a purchase as large as a car. What’s the rush? The car will be there tomorrow, and if not, they can make more.
I’m shopping right now for a new car – me and the GF went to 5 dealers (all different makes – looking at a VW Golf, Mini, Fit, Scion XD, Impreza and Madza3 and did the test rides in one day. The dealer experience varied from downright slimy (the Honda guy) to uninterested (Mini, Scion) to helpful/professional (the rest). We’re cash buyers and ready to deal so I was kind of surprised.
The best salesperson were the guys/gal who went over the pros/cons of the vehicle, provided accurate, detailed pricing going in and promised to follow up after we had a chance to think about it. Surprising only 2 of the 6 dealers did.
After picking the model we wanted, we contacted the salespeople and asked for their best quote (and we also did a lot of consumer report, edmunds, ect research so we kind of knew going in the offer and I was off by 200 bucks in the end.
The Mazda/VW/Subaru salespeople gave me no pressure to close, and were helpful and enthusiastic about their cars. I was pleased and would have been happy dealing with any of them.
Maybe it was because i knew what i wanted, about what i needed to pay for it and all they needed to do was show me the car and let me test ride it.
In the end we chose the Madza Grand Touring Hatch. (nice car btw)..
As for the comments about being local, giving to charity, long time in business – that sort of thing doesn’t hold any water for people today. Car dealers aren’t in neighborhoods, their local charity giving is their choice and should come out of their bottom line and how long they’ve been in business – please. I’ll take the competent newcomer over the lazy long timer every time.
I want value, service and not feeling like I’m being hosed. The fluffy stuff doesn’t mean a thing to me.
On all account the local Madza, VW and Subaru dealer did just that.
My advise to salespeople – just be upfront, give us your best price the first time and make the transaction transparent – include all fees/charges in your quote – no surprises..
My advice is ask to see a blank contract B4 you even talk price. I’ve gone thru all the dealings & agreed to a price. Only to have the dealer present me a contract with $400 of “Zactec” & a $375 doc fee preprinted a line below the “price” and be told its a non-negotiable add on.
All I know is that shortly after she graduated from college and had a job, my daughter bought a brand new Corolla. The car has been driven about 32K miles a year. I change the oil for her. It has needed next to nothing for repairs. I imagine it should have some attention at 100k. I wish my household appliances worked this well.
The old, old line: Marry in haste, repent at leisure
“So there are still suckers born every minute, but on balance are car buyers better informed than they used to be? Is that coincidental to the car market’s recent downturn, or did one phenomenon cause the other? Personally, I don’t see a lot of “civilians” making particularly well-informed car-buying decisions because they usually believe a quick decision will be less stressful than taking the time to make the right decision. What are you seeing?”
The Sheeple’s criteria for car buying:
1. Do the neighbors have one?
2. Will I look cool in it?
3. Can I afford the first months payment?
That about sums it up.
There’s a banner ad for a local dealer at the bottom of this page that offers a 2009 Cobalt for “$10,998″ in big print. In the fine print, this price includes “$3,000 cash or trade, and all applicable rebates”.
What if I don’t have the 3k cash or trade, and am not a college grad or a permanently disabled cuckoo clock repairman?
Oh, so the car is actually $14,998? Really.
Why would I even walk in the door of a place that would pull that kind of crap? (And a lot of them do).
…2 points…
@ NulloModo : …these sales trainers … if they were any good at selling cars in the first place, they would still be doing that instead of trying to sell their seminars.
1-Rebuttal to comment above: Not necessarily true at all. …Dealer Sales: Working 10-12 hr shifts nights/weekends, waiting for Ups, lack of respect from customers, grinding out retail sale after retail sale; a tough way to make a living.
Yeah, if you’re good at it you can make a good living but still a tough life.
….vs. being “the man”, lecturing in a hotel conference room to a room full of salespeople hanging on your every word. If you’re good at that you can make an even better living
And even if the money is a wash, the intangibles; the work environment, status, dignity, etc, are eons apart.
2 – Customer Preparedness: My anecdotal opinion from watching friends and acquaintenances buy cars is that there are two types of “reseach” people should do.
IMO most do at least some of the first and only a small percentage do any of the 2nd.
The first is the “fun” research. …Reading about the vehicles….comparing specs, features, road tests, MSRP prices, reviews, etc. Test driving cars. This is all about researching the specific car….to the point where you say, …”this is the car, model, trim level, and color that I want.” Most people do this to varying degrees.
The 2nd area of research is the “not-nearly-so-much-fun” part. …Researching how the actual process works; how everyone you talk to is on commission and what that means to you, what the holdback is, lining up financing ahead of time, understanding the infamous 4-Square and what it’s really used for, and on and on, etc, etc.
The information is out there in the public domain. From Amazon to Barnes and Noble there is a raft of consumer-oriented literature explaining all of this “inside baseball” of the dealership experience.
homework
In my estimation very few people take the time to understand this part of the buying process. They research the vehicles and think they’ve done their homework…. and it costs them.
Armadamaster: That explains all the SUVs the sheeple bought over the past 15 years or so.
Doesn’t explain the Sebring purchases though.
Robert Schwartz: Chrysler has dropped their sales to the fleets to nearly zero this year.
Shaker: Never opened the Sunday paper and seen all the low price come ons? You can’t be that naive to think it’s only your local Chevy dealer doing it.
Many car salesmen know very little about the technical specs of what they sell. Many have just started working, and many do not seem vewry smart anyway.
Buyers make a ton of mistakes, whether they are informed or not, largely because they are Math and Econ Illiterate and focus on just the FIRST COST, how much they can afford, and not the TOTAL life-cycle cost, incl. resale value, maint and esp. repair.
Hell, buying a new car or a used car from a dealer is econ illiterate in itself, unless they have some hUGE lease deal on an ueber-0luxury car.. but even that one, you will pay it later, when your resale goes down 78% in 5 years.
All the information is readily available for any customer/prospect to “empower” themselves to make a decision that suits their requirements.
The information and “empower” has been there for years. In addition customers trust manufacturer websites and this would mean that they also trust manufacturers.
Is the customer truly well informed in an environment of “dynamic pricing” where everything and anything changes weekly?
The customer waits till the last 10 days of the month to actually close a deal, this gives him additional leverage on the dealer.
The “financial package” is an intrinsic part of “moving vehicles” the customer/consumer responds to the financial offers, the manufacturers and dealers are well aware that consumers are keenly attuned to “financial offers”.
This year Hyundai and Kia (at least in Canada) are dispelling the “urban legend” that they are not good vehicles, and other established manufacturers of “good vehicles” as per the urban legends are losing business. A good warranty, a strong financial package, quickly dispels “urban legends”.
In a market with strong lease penetration (as is the case in Canada) where the relationship with a vehicle is 36 or 48 months. With a “walk away” lease do folks really care about the long term reliability, or the maintenance costs when the warranty is in force during the duration of the lease.
The reasonably informed customer is aware of the ongoing product parity among all manufacturers, that most components come from the same suppliers, and technology is not easy to diagnose or repair.
Styling, technology interface, financial package, is what moves vehicles, if its slow to move improve the financial package. C4C is a testament that “financial package” moves vehicles.
Is the buyer well informed, in most cases yes, he waits till the end of the month to finalize a deal.
ZoomZoom –
Your arguments are fair enough, but from the other side being in business for a long time for a local store is quite different for a local store than for a multinational corporation. At a certain point if customers were regularly getting screwed over, word would get out, and people would stop coming. Similarly, a family owned dealership, where the owners have their name up on the building, implies a certain amount of accountability, after all, they have to live in that community too, and don’t want their name associated with being con artists. There are, of course, exceptions, but I doubt Bill Heard can show his face anywhere inside of certain Texas cities without having to worry about running into an ex customer with a concealed weapons permit.
In the end, I am just against the whole Wal-Mart/Starbucks/Olive Garden/Best Buy takeover of America. Yes, you can usually get lower prices and more consistency vs. independently operated business, but you also lose the human touch, and with the consistency is consistently bad, such as in the Wal-Mart or Best Buy cases with regards to employee knowledge and customer service, you’ve lost even more.
“Andy D :
September 29th, 2009 at 2:04 am
All I know is that shortly after she graduated from college and had a job, my daughter bought a brand new Corolla. The car has been driven about 32K miles a year. I change the oil for her. It has needed next to nothing for repairs. I imagine it should have some attention at 100k.”
You mean the car has less than 100k and you are bragging about the three years ort less of easy highway miles you got trouble free? What did you drive before, a Yugo or a 1989 Hyundai Accent? ANY car will do well the first three years, esp when you drive it 32 k a year, with little cold engine driving etc. The test is when you pass the 125 and 150 and 200k, and many cars do with no problem, and with no maintenance other than oil and filter.
” I wish my household appliances worked this well.”
They should! I have gradually replaced all of mine, except the furnace, but I bought my place 22 years ago, replaced stove in 91, refrig in 2002, washer in 2005, dishwasher in 2008. Oh, and water heater in 2000 or so. Most must have been over 20 when replaced. My furnace, dryer and vacuum are all well over 22. And none of them is an expensive model.
In total agreement with John Horner’s last graph, last sentence. Commit to buying without knowing the price???!
Agreed, David. I’ve always had the price before making the purchase, and it helps that there’s usually no trade-in and I’m writing a check.
Fortunately I live close to Fitzmall.com in the DC area, which posts their prices on the web. The last time around, a bare-bones special advertised in the weekend paper was sufficient for our needs.
Re: “Econ illiterate” buying from dealer:
I don’t think I’d EVERY buy a high end late model sports car used. Would you buy an 2008 or 2009 m3 used that is NOT CPO ?
I’d worry the guy autocrossed it for the first 5k miles and that it needed major work.
The same with bikes….Unless it’s super cheap, I doubt I’d buy a sport bike used. If you wait until end of summer here, the $12k MSRP bikes can be had new from the dealer for $7999 + TTL, untouched.
When a new car leaves the factoryu floor, why do I need a dealer to sell it to me? There are things dealers are needed for, such as maintenance, some repairs (the tough ones), etc, but why in the world should one not be able to just order a damned car from the factory and save onself all this large or small dealer difference? (note i did not call it profit, it may not be, but for the customer, it is $ wasted on a MIDDLEMAN.) And if I do not live close to the factory, just ship the stupid car to me, the transport cost (not the transport CHARGE you pay today) should be no more than a few 100 $.
I particularly like the final “guarantee” offered at the end of the video. It sounds just like the phony guarantees that “We’ll beat any deal”, etc that I hear from the weaseliest of dealers. Do you suppose that the intended audience for this seminar really can’t hear the echoes of their own empty “guarantees”?
Not necessarily, if you understand what you’re paying for and you value it. Sure, not everyone understands what they’re getting into with a new car.
I could argue that it’s “econ illiterate” to get season tickets to the NFL, when you can watch the games at home in more comfort and avoid the traffic. Or to pay for business class or first class airline tickets. Or to pay the prices required at a really high end restaurant.
It’s econ illiterate to think that people having different preferences than you makes them econ illiterate.
johnthacker :
September 29th, 2009 at 9:27 am
Hell, buying a new car or a used car from a dealer is econ illiterate in itself
Not necessarily, if you understand what you’re paying for and you value it. Sure, not everyone understands what they’re getting into with a new car.
“I could argue that it’s “econ illiterate” to get season tickets to the NFL, when you can watch the games at home in more comfort and avoid the traffic.”
Not comparable. (I would not care to do either, BTW. SPorts is like Sex, it is far healthier to do it than to watch others do it!!!!)
But when you buy your used car deom a dealer or an IDENTICAL used car from a PRIVATE buyer and SPLIT the difference, it is the SAME deal, and a WIN WIN for buyer and seller.
“Or to pay for business class or first class airline tickets. Or to pay the prices required at a really high end restaurant.”
Same fallacy.
“It’s econ illiterate to think that people having different preferences than you makes them econ illiterate.”
Right. So efverybody knows what they are talkign about, or what they are doing. Even GM, and even the million or so people whose cars will be REPO’d this year.
Hell, let me give them a honorary PhD in Econs. If they give my U a $100 mill gift each, it will be very easy, trust me.
What i have seen often is a seller that don’t know is own friggin product much…i knew more than them on the product THEY sell…shame. I would know every thing about every competing product too…just love cars! But a lot of customer are sheeple, so let them get aveo, sebring and any crap daewoo builds…and any toyota, honda that sells on a reputation more than actual product ;)
As buyers we have several advantages but one disadvantage.
We are not in a hurry to buy, so pressure doesn’t work on us.
We keep vehicles 7 to 10 years or about 120,000 miles, so a few hundred dollars price differential is not significant in the buying/negotiating phase.
We use an excellent local independent repair shop, so we are not at the mercy of dealer servicing, except for recall items.
The disadvantage: We do not know how to assess inventories of vehicles we are interested in, including Honda Fit, Toyota Prius. They seem to be in very short supply in our area (Mid-Atlantic). This affects price and available options from color to trim lines, etc. Are we seeing a real shortage or just the illusion of same?
What is a good source to find accurate information about inventories?
…but why in the world should one not be able to just order a damned car from the factory
Because (deep sigh) the OEMs are not set up to retail cars one at a time to millions of customers.
They manufacture cars and sell them wholesale. That’s what they’re good at (Or in GM/ChryCo’s case, not even so good at that).
That’s a different business from retailing.
When one goes to Target, etc etc, their merch. didn’t come from the “Target Factory”. They bought their stuff from a manufacturer that sold to them wholesale.
Wholesale-Retail… different businesses. Can it be done? Sure, but not easily or cheaply. Dell sells direct. Probably a few others as well.
Ford tried it. During the Jac Nasser reign he wanted to vertically integrate and bought dealships in a handful of markets around the country.
Long story short… disaster and eventually all the stores sold back to dealers. …Very expensive lesson.
dwford :
September 28th, 2009 at 10:55 pm
The said fact of the matter is purcashing a car is very scary and nobody likes to feel they overpaid. Another factor is the sales model sucks for selling and supporting the customer in that once the sale is made the salesperson usually treats the customer like chopped liver. The whole model of service advisors needs to be turned over to the salesman. It’s simple you sell me a car then we are together until death takes the car or me. Ah but that runs against the shortsighted nature of things doesnt it?
Regarding the bullshit teaser prices in the Saturday car ads:
Let’s say you’re being the honest dealer, showing car X at $14,995.00(or better yet being destructively honest and saying $15,000.00). Next page in Saturday’s classifieds is the competing dealer from across town, same make/same model, is claiming $11,995.00 – with the fine print talking about $1,000.00 military rebate, $2000.00 minimum trade-in, $500.00 paperwork fee not included in the purchase price, etc.
Which dealer do you think is going to get the lookers-possible buyers that Saturday?
Yeah, yeah, yeah; you’re smart enough to read all the fine print and do the math in advance. Most buyers aren’t. And a dealer can go broke waiting for the intelligent buyers to show up on his lot.
Good old sleazy lowest common denominator. Unfortunately, it wins every time.
homeslice3
Full disclosure I am a salesperson
First you have to decide what a best price is. Depending on the vehicle, demand time of year etc. it can change. That is why asking if you are willing to do business today is a fair question. Making a deal is about eliminating variables. make, model, colour, trim options, cash, finance lease, money down, monthly payments interst rates When are you going to buy it?
Let’s assume best price is on a vehicle in stock. The best price is the absolute lowest we can sell it for i.e the minumum amount of profit or the maximum amount of loss we are willing to take.
The problem with leading with your best price is that after that there is no where to go. You also lose the oppurtunity to sell the vehicle for more than your best price.
People think they are people but really they are a person. What I mean maybe that is how you as an individual want to do business but not everyone thinks that way. As a salesperson I have to figure out what to sell as well as how to sell.
Just as I expect you to want to get the best deal on the vehicle you are interested in it is in my best interest to sell it for the maximum you are willing to pay. Notice I did not say MSRP or market adjustment. If I offer a price that is less than your offer would be without knowing what your offer would be I risk devaluing the vehicle in front of your eyes if I do not know how informed you are.
Like alot of things if you give it up to early or to soon the majority of people won’t respect what you have to offer. Some shrewd people people may
know but most won’t. Those shrewd people are the informed customers and I would rather deal with an informed customer than a person that I have to prove to them the my price is fair.
“oldowl :
September 29th, 2009 at 10:06 am
As buyers we have several advantages but one disadvantage.
We are not in a hurry to buy, so pressure doesn’t work on us.”
Not true. If you only own one vehicle, at the end of its life, you are in a great BIG hurry to buy, when it breaks down and it is not worth fixing.
The disadvantage: We do not know how to assess inventories of vehicles we are interested in, including Honda Fit, Toyota Prius. They seem to be in very short supply in our area (Mid-Atlantic).
The Fit and esp. the Prius is in EXTREMELY short supply almsot every where, I heard only… 3 days of supply instead of 30 and 60 and 360 (for the stupid Aveo!)
“This affects price and available options from color to trim lines, etc. Are we seeing a real shortage or just the illusion of same?”
It’s quite real. Many Toyota dealers charge an extra $5,000 for the Prius. I would not even pay an extra $500, despite the very high regard I have for this vehicle.
“What is a good source to find accurate information about inventories?”
The Bible of the Automotive Indistry, Automotive News, Autonews.com, or your library has it every week, inventories are published every month. My U has a subscription I can access on the Web all the time free (to me)
“…but why in the world should one not be able to just order a damned car from the factory
Because (deep sigh) the OEMs are not set up to retail cars one at a time to millions of customers.”
Deeper sigh, in today’s world where you can mail-order a HOUSE, it is NOT difficult, EVEN for the bankrupt big 3. It has nothing to do with being difficult but with being nice to their dealers, who may have legal protection against this.
“Ford tried it. During the Jac Nasser reign he wanted to vertically integrate and bought dealships in a handful of markets around the country.”
That’s not the same thing. I do NOT want these clowns to BECOME dealers, I want them to ELIMINATE the Middlemen Dealers.