Thursday, July 16, 2020

The Retail Car Biz - A Rant


A long, rambling rant written for my pleasure. You are free to skip it.

Every Blade of Grass has a post up about their car shopping experience.


The retired car sales manager/salesman in me became irate. Not about the blogger; about the dealerships they visited. What a pathetic pair of losers!

During a severe downturn in construction circa 1986 I started selling Suzuki Samurais while waiting for the construction industry to recover. Ended up spending 30 years, with occasional gaps, in the retail car biz.  Why? Money! I started mid March and made just short of $50,000 that year. Plus, I was home every night.

Getting hired in the biz is easy. One cynic said, “It is a job that hires people no one else will hire, to do a job no one wants to do”.   A lot of truth there.

My good fortune was starting out working for a hardcore son of a bitch. You performed, or you were out. He taught me the ways of the “deal” and to park my ego and personal problems in the employee lot before walking in the door.

People come to a car lot to buy a car/truck. Let them! Spare me your, “Yah, buts”. Your job is to find a way to make that happen! Store is closing in ten minutes? Bullshit, the store closes when the last customer leaves.

Indulge me in a personal story. I worked for Steve Lance, aka Little Hitler, in a used pickup and stock or utility trailer lot. A repeat customer of mine was a young professional bullrider from Wyoming. He traveled with his wife and children (damn, they seemed set on repopulating the earth) in an extra cab pickup (I had sold him) with a large slide in truck camper. They pulled in one night around 7:30 pm and left just short of midnight in a crew cab dually. We opened the shop, used a hoist to transfer the camper to the new purchase, and they went down the road to some rodeo in Texas.

This type of a sale wasn’t uncommon. We did, in the words of the immortal late Jackie B. Cooper (see him on YouTube), “Winners do what losers won’t”.

Over the years I made it a point to attend at least two or more sales seminars put on by Jackie Cooper, Grant Cardone (again, on YouTube) or others, shelling out greenbacks from my own pocket. Shocking, to those who know how tight (or cheap, your choice) I am with my money. Why? To get, “A checkup from the neck up”.

From where I sit, there are few professional salespeople in new car dealerships. The hardcore mutts are at independent used lots. Why? Money, of course. I blame the “bean counters”. When you examined a 1990’s era balance sheet, a number that jumped out was 25%-35% sales commission payout. Oh boy, we can do some trimming here! What escaped, and continues to escape, these narrow minded accountants is the word, “commission”. Commission, as in if you don’t sell anything, you don’t get anything.

Perhaps the worst example of this thinking was Robert Strange McNamara, Ford Motor Company and LBJ’s Secretary of Defense.

At Ford, the number crunchers determined it was cheaper to pay out the occasional successful law suit than fix the problem with the Pinto gas tanks. At the Defense Department, they decided to go with a different grade of ammo for the M-16 than what it was designed to use (powder formulation, I believe) to save money. We can only speculate how many soldiers/marines/sailors died because of that decision.

So, Frank the Tank, in your infinite wisdom, how do you sell a car?

First contact, meet and greet. “Hello, welcome to DowntheRoad Motors. Thank you for coming in. I’m the Tank, and you are?”

Now, shut the fuck up and let them talk. They want to say, “We’re just looking”. Don’t make it easy – puts you way behind the power curve.

Next up, don’t start asking questions. You haven’t earned that position, yet. No, don’t let them walk the lot on their own. Have practiced verbiage. “Folks, we have $6,000,000 in unlocked inventory and the owner doesn’t want people just wandering around. I will follow along, not bothering you, but available to answer any of YOUR questions”.

(Yeah mutt, are you here to buy a truck, or to snag a control knob missing from your ride?)

Find, land them on a vehicle. Get them to drive the vehicle (on your preselected route – not theirs.)  During the drive, keep your fucking mouth shut! That vehicle is a far better salesperson than you. On the way back ask them if they like the vehicle. With an affirmative response, ask them this. “If we can make you a great deal on this car, will you drive it home today?’  “Well, we are still shopping”. “I understand, but you haven’t finished shopping until you see the price, have you?” You may need to ask this three times a little different each time. Practice!

Get them inside and get it on paper. From that point your “desk” (sales manager) will work the deal.

Here comes the Yah, but  choir. “But, I don’t want to waste my time. What if they can’t buy?” At this point, and only at this point, do you have a customer who has decided to buy and doesn’t want to start the process over at some other lot. Now, you take control and find them a car, with the advice of the “desk”, that they can buy.

The average sales person will sell one out of six to eight people they talk to. The best I ever knew was Dirty Al Imhoff, who did one in three. My records (you do keep records, don’t you?) show I averaged one in 4.2.

I’m glad to be out of the biz, and I’ve enjoyed the other stuff I’ve done since “retiring”. 

In appreciation of those who bothered to read this far, here are a few tips. The best time to buy a car is the first three business day of the month (some weekends overlap into the next month). The best time is right after opening hours. Try to find out who their top salesperson is, and make an appointment.

OK, why? In the biz, if you are going to have a great month, you need to jump start it. Most car sales are made in the last week of the month. The top salespeople know this, and will bust their butts to get their month started (as in, working the “desk). The sales manager (“desk”) wants to, “get the store open”. The desk will take any damn deal that isn’t a loser to, “get one on the board”.

Now, consumer, it won’t be a cakewalk. One hard case manager put it this way, “I will take any deal that makes us $300, but before I take it, I will grind the tits off the customer. It is all iron; I can get more iron. I can’t always get another customer”.

Yes, I know, consumer, YOU DON”T LIKE IT. Tough shit. If you fight the fight for three hours, and save $800, what does that come out as an hourly wage?

So, back to unicorns and butterflies. Have a wonderful day!

15 comments:

drjim said...

yuk-yuk, and thanks for the insight!

I've been on both sides; as a customer, and as an "inside observer". As my friend who's parents owned the local Pontiac store taught me...."There's An Ass For Every Seat".

Anyway.....

We're past the "Just Looking" stage, and have 90+% made the decision to buy. We started with five vehicles, and are now down to three finalists, The Chevy Colorado, the Honda Ridgeline, and the Jeep Gladiator. The test drive, or drives, if required, will determine the winner.

I can drive just about anything, but my Sweet Little Wife can't, or more accurately, won't. As you note, the "Vehicle Will Speak To Her" about the things she values, and that's why I'm thinking we might very well wind up with a Ridgeline. They appear to be exceptionally nice car-trucks, the magazine reviews rave about them, and the JD Power report is very good.

But, she also really liked the Colorado, even though it's much more truck-like. The magazine reviews and JD Power report are also very good for the Colorado, and I could easily live with one.

I'd really like the Jeep Gladiator, for it's ruggedness, towing/hauling capability, off-road ability, and yes, the Cool Factor. But even as "refined" as they've attempted to make it, it's still a Jeep Wrangler with all that entails. She's agreed to drive it, but I don't think she'll like it.

Which brings up a question to you. From my experience and knowledge, I know a dealer would much rather sell a car from stock, or do a "dealer swap", than special order a car. It clears a car from their inventory, and gets it off their "floor plan". They might even get some incentives from whoever carries their floor plan, vs ordering one for a customer. What's your take on that situation?

From my looking around at who has what in stock, it appears all the Hondas get ordered by trim level, and the other items you can pick with the online "Build-and-Price" tool are ALL dealer installed. Things like the side steps, hard tonneau cover, floor mats and other trinkets that don't really need to be screwed on at the factory. That's a bit different than how Detroit does it, although the Build-and-Price tool for the Colorado makes specific mention that some of the items I picked were dealer installed.

As far as the dealer staffing we encountered, the Chevrolet and Jeep dealers had friendly, respectful, helpful people *right there* when we walked in, and the Honda dealer had the deer-in-the-headlights look when we walked in.

Not encouraging, but we'll give them a second chance vs driving to Greeley.

Well Seasoned Fool said...

I've been out of the biz long enough not to know that how the money side of the dealer/factory works so no advice.

You are the customer; go the way you want to go.

RE the Honda dealer in Greeley, in the past they hired people I fired.

drjim said...

Hah! Honda of Greeley has pretty much what we want in stock. What caught my eye when checking the pricing was $498 "Dealer Fee" they add to the MSRP.

I'm guessing this is just flat-out "Additional Dealer Profit" like they used to tack-on in The Olde Dayes, along with $200 ScotchGuard, $200 "Polymer Paint Protection", and $200 "Pin Stripes".

They have a "Lowest Published Price" listed that's about $4k off the MSRP, which is about the discount we're expecting.

I'll have to dig deeper on Honda pricing.....

LSP said...

Sales can be a tough business, I think, and you describe it well. Sell that vehicle, get commission or don't get any money.

That aside, I'm looking for a new/used F150 4x4 so I scour the net (Cargurus) looking for what I want at the right price. When I'm ready to buy I'll swoop down and pay cash on the nail.

Perhaps the internet's changed things a bit?

Old NFO said...

Interesting 'view' from the inside. I bought one car at 10pm from a friend who was the 'desk' that night. The dealership supposedly closed at 8pm. Thankfully, he had keys to everything... LOL

Well Seasoned Fool said...

DrJim
Dealer handling is entrenched in all car lots in Colorado. What you do is offer $500 less than their best price. You won't get them to not collect dealer handling. If they don't collect it on every deal, they are liable to rebate it on every deal they ever made.

RE Greeley Honda. I really don't know the place. I did know, back in the day, some fine scoundrels who worked there.

LSP
Two things profoundly changed the car biz. The internet, and the gutless manufacturers giving out the dealer cost on their products. Are you one of the 1/2 of 1% clergy with decent credit? Cash is not always welcome. The sales department loves it; the finance department not so much. I do see some tasty items from time to time on Facebook Marketplace. Craigslist is full of scammers.

OldNFO
Your friend was a pro.

drjim said...

OK, it's a "Colorado Thing". In re-checking the other dealer sites I see they all have some sort of "Dealer Fee" that varies from $460 to $498. As long as I can explain it to SLW, and get her to understand it's a "Line Item" thing that all the dealers do, we'll be OK.

Honda is offering 1.9% right now to "Qualified Customers", Jeep is offering 0%, and no sign of special rates at the Chevy dealer. but IIRC, GMAC usually has something for "Qualified Customers".

And I was right about Hondas being built in certain trim levels, and ALL the options are listed as "Accessories, Dealer Installed", with a note that Dealer Installation Cost is NOT included.

The Honda has a few demerits for certain things that could be troublesome, but I'm not mentioning them to SLW. If she picks up on them from driving it, then the Honda might very well get scratched.

Well Seasoned Fool said...

DrJim
With you and SLW's credit scores, you can do what you want. You will be in two negotiations, the "sales" desk and the "Finance" desk. It is the finance desk where folks get hurt; nice and relaxed because they beat the salesperson so the smiling jackal behind the desk leads them to slaughter. (I hated doing F&I and avoided it whenever I could). I liked to sell iron, not bullshit.

I would walk in with a commitment from my credit union in my hip pocket. At least, know their rate.

The one thing I recommend everyone get is GAP insurance. If you get in a wreck that totals the vehicle, your insurance may not pay off the note in full. Get GAP! You can shop for it, too and your Credit Union offers it.

Well Seasoned Fool said...

PS: If you get an "extended warranty" get the manufacturer's one, period. The aftermarket ones are crap IMO.

Brig said...

Interesting info. I'm happy with the deal I got on my Tahoe, it was a year old, with low mileage, and had excellent maintenance records. Though the bean pushers wanted me to finance it, I didn't.

Well Seasoned Fool said...

Brig
Nowadays the dealer makes more on the financing than the vehicle.

drjim said...

Yes, we have the rates from two Credit Unions, and I should probably check to see what mine is offering.

I well-versed in the "Separation of Powers" between Sales, and Financing. Besides my friends who's families owned dealerships, the GMAC guy at the Pontiac store was a cousin of mine. Since I was "family", and knew the owner's quite well, I'd get the best rate GMAC had, and heard stories that you've probably heard.

Most people don't know or understand that it's two, separate negotiations. SLW announced tonight that we ARE buying a new car, so she's sharpening her claws and sharpening her focus.

She can be scary when she gets like this.....

Tomorrow we'll be test driving all three cars. We should be down to two tomorrow night, as I'm not holding out much hope of her liking the Gladiator. That leaves the Ridgeline and the Colorado. If we have to, we'll go back and bug them for a second test drive. Yes, we're old folks and take our time on a purchase like this. It probably drives some of the salespeople crazy, and gets a chuckle out of the others.....

Well Seasoned Fool said...

DrJim
I might enjoy being a fly on the wall.
About the only thing a customer did that upset me was not buying.

Old NFO said...

WSF- My classmate went on to manage the dealership until the son of the owner got involved. Tubby saw the handwriting on the wall and walked rather than put up with the son. He had enough connections in the business to get a Kia dealership (with the old man's support), and he did well with it, sold it three years ago.

Well Seasoned Fool said...

I like success stories.