But behind the haggling and the anxiety and the magnificent theater of the salesman going to speak to the supervisor, how does this process work? One anonymous vehicle salesman raised the veil and gave us a flavor of what it’s like on the showroom floor. And above all, our informant lets us know how we can secure the best deals next time we are shopping for a new vehicle.
Just how much cash do you make on a car deal?
People in different revenue jobs are especially suspicious. When real estate brokers come in to buy cars, they assume we create the same 5% they do on every deal. Nevertheless, it is not true. I have had deals in which I got $100 on a car after negotiating with a client for 4 hours. Buyers simply won’t accept that on many deals, margins are slim to the salespeople. Honestly, used cars are really where the money is made. I got more about a used car with 95,000 miles than I did on many brand-new ones.
Can you truly have to”speak with the manager”?
We call it”desking that it”we’re taking the client’s offer to the supervisor’s desk. I’d say 90 percent of their sales force at each dealership must do this. It’s the manager’s job to help structure the deals to make the most profit for your dealership, or to transfer stagnant inventory quickly.
MORE FROM POPULAR MECHANICS
There is a psychology behind the dealer’s desking practice. If they understood the bare-bones, bottom price the supervisor could sell an automobile for and still make a commission, then they would reevaluate the sale and convey to the customer, “Alright, I understand your funding is $35,000. Well, my bottom line is $32,000, so I’ll just sell it for you for that and everyone will be pleased.”
Quite often, we would get enticed by bonuses tied to the number of automobiles sold. My boss could state, “After your market 20 cars, you’ll find a $4000 bonus.” Well if I’m at auto 19, and I am inside $500 off closing my 20th dealI’d be willing to consume that $500 myself, promote the consumer his automobile, and find that juicy bonus. So that is why we have to talk to the supervisor every moment.
Just how much profit is in every car?
On certain cars, there’s a huge gap between dealer invoice and MSRP. On most lower-priced automobiles, that gap is quite small like $400.
You’ve got a far different purchaser than you did 20 decades back. The Internet has made buyers experts on the cars they wish to buy. They can explore every detail for their cars, the dealership, the purchasing experience–what. And there’s a bigger portion of the buyers today than previously that know more about the car than the salesman does.
However, many times it doesn’t seem to be about the actual sale price of the automobile –it’s about the buyer’s perception of this deal. If they feel like they are catching a rest they leave happy.
What is the best method to get a fantastic deal?
Do not bother hanging that”all money” provide to your salesman. He does not care. We make less cash on money deals. We make more money on the funding and find the money in the bank within the same time-frame.
But regardless of what the deal looks like, it is the hardcore hagglers that receive the lowest deals. There are those”grinders” who come in the shop –people who will keep you in the procedure, chiseling the purchase price of the automobile down and requesting you to throw in some perks on top of it. These buyers are successful. But I’ve seen some customers win by being the nice guy. They tell you just how much they can afford, and you need to work together.
The best deals are situational. Perhaps a fantastic negotiator is working to buy a car the dealership can afford to let go at a considerably reduced price. And that is up to the manager looking over his inventory and seeing which cars happen to be sitting. If I am him, I’d much rather turn that car’s place three times in one month than to have one car sitting. The larger dealers move a ton of stock every month, so they can manage to sell a few cars in”Back of Book,” or $100 to $200 below invoice. Outrageous deals, like thousands under invoice, are extremely rare but can happen. Sometimes the manufacturer will have bonuses tied to earnings.
On the other hand, the more picky a customer is, the better. Let’s say there is a sedan in an especially unpopular color combination. It might have been sitting on the lot for a lengthy time and the dealer may be very willing to market it to you at a lower cost than the same car painted in a desirable silver or black.
When is your ideal time to buy a car?
I would say toward the end of each month you may have the ability to receive a better deal. That’s because a salesman could be closer to hitting a certain sales threshold and might be more motivated to work for your deal. You see, salespeople earn their commission based on the percentage of the profit of a car sale. However, your commission increases when you sell more cars.
At my dealership, you started at 22 percent for the first eight cars you offered. Then automobiles nine and 10 have been 24 percent. If your salesman is on automobile 16, he’s going to nudge the supervisor to take your deal. I can inform you that no salesman is going to take a day off at the end of the month.
They’re trying to close deals and hit those numbers. (Editor’s note: We’ve also heard that the end of the year may be a wise time to purchase as well since the dealers need to get rid of leftover cars before the new models arrive.)
What’s the craziest sales scenario you experienced?
Before I left the dealership, another salesman sold a car to a man who had been using false identification. It was a Friday evening. We sold the luxury car in question, and the man got the car off the lot because no fund offices were open. We couldn’t confirm him 100 percent. And that’s common. Typically we will close up deals like this on a Monday morning. That Monday we found out he was using someone else’s identity and that we’d awarded a $50,000 automobile to a burglar. Despite all of the documentation and information that you will need to buy a car these days, he pulled it off. It was incredible.
Perhaps you have gouged a client?
I’m sure it happens. But I can’t say I saw anybody at my dealership do anything untrue. These days, with all the JD Power customer testimonials, the salesperson could be in very hot water [for not treating] customers well. On these surveys, any answer but a perfect”10″ is regarded as a fail. Therefore, if the salesperson receives a poor review it means less money for your dealership and less money in his pocket. One dealership I understand used a salesman earning something like $400,000 annually. He was a successful man. They let him go since his survey scores were bad. These surveys and sites like Yelp will immediately expose anybody with unethical business practices.
At our shop, the fund manager was supposed to make an extra $1000 per deal above and beyond everything you negotiate the vehicle for. Now, that may include selling the customer Lo Jack, an extended warranty, or even window tint. As a customer, you simply need to say”No” to a lot of those extras.
Or that extra money could come through funding. Let us say the customer’s charge is questionable, and the bank agrees to do the salesman a favor and finance the customer for 5%. The finance man could tell the customer the very best speed he could get is 6 percent. Therefore the dealership brings that extra 1 percent on the loan. So yeah, there is money made in the fund office.
Do you treat customers differently based on appearance?
Do not judge a book by its cover. I have heard numerous stories from salespeople about potential clients they ignored because they had been dressed tremendously raggedy–and another salesperson eventually talked to the client and got the sale.
I understand one salesman at Arizona who said he saw a man stroll into his shop in shredded jean shorts along with straggly hair and sunglasses, looking like a punk. My friend ignored him. It ended up that punk was rocker Alice Cooper and he bought six cars. These days, you can’t tell who’s money and who does not.