When purchasing a new vehicle, how do you get the sales people to take you seriously? How do you best negotiate to get what you want and not end up thinking you’ve won, when you really didn’t get all you could have?
We’re going car shopping this coming weekend, and while I know my hubby thinks he’s a brilliant negotiator, I worry they get to him too easily with praise… Think that episode of South Park when the kids are all playing with the Pokemon-type toys and the company keeps shutting down the concerned parents and officials by telling them how big their penises are.
Serious Shopper Sarah
Dear Serious Shopper Sarah,
I offer a unique perspective. I’ve been working at car dealerships my entire adult life.
I used to be a Senior Manager (Human Resources Director). In that role, I had access to unlimited financials, sat in top secret meetings with and without the manufacturers, I’ve launched giant investigations and fired snakes who do the wrong things, I’ve hired the best of the best, and I’ve been involved in forecasting the next year’s profits… I’ve pretty much seen and done it all… on a top level scale. So I know some things.
And then I decided that job sucked, and you know what would be fun? SELLING THE CARS MYSELF.
I will tell you exactly how it all works… at the risk of getting fired.
The goal of the car salesman is to give away as little money as possible on the deal and to sell as many vehicles as possible. You obviously know this, or you wouldn’t be asking this question.
I get paid commissions. The more money I give up in the deal, the less my paycheck amounts to. So let’s chat first about the pay plans you are up against. This way, when you go into that car dealership, you can look that dude in the eye and try to figure out where he’s at in the process in his own head.
The Pay Plan
I’ve written countless numbers of dealership pay plans over the years. The number one goal of any dealership pay plan is to drive numbers up and hold as much gross profit as possible. Essentially, the more you sell, the higher your commissions pays out. Sell more than ten cars? Get paid a higher percentage. Sell more than fifteen cars? Get paid an even higher percentage.
Most dealerships pay out for things like “Top Salesman”, “Fast Start” (meaning you sold a certain number of cars before the 15th of the month), and for hitting certain overall unit count levels. This bonus money tends to be pretty substantial.
This Actually Works In Your Favor
Okay, so now you are in a total state of panic.
HOW CAN I EVER WIN?
Stop panicking. This isn’t rocket science.
Think about it….
I am trying to hit at least ten cars each month because my bonuses don’t pay anything unless I get there. I will whore those cars out to get to that number. I don’t care if I lose money on some of these deals because I need to get to ten. Nothing will happen for me commission-wise until I start hitting these plateaus.
That being said… You know how you think you’ll get a better deal at the end of the month? Pfft. We’re whoring them out in the beginning of the month when I am panicking that there won’t be any traffic! These snow storms are killing floor traffic, and that totally works in your favor.
Chevy also pays me bonus level money. I have to sell at least three new Chevys every month to get an additional paycheck from Chevy. When I hit eight new Chevys a month THEIR MONEY TRIPLES ON EACH CAR I SELL RETRO BACK TO THE FIRST CAR!
So I make most of my money on bonus levels, not on the deal itself.
New Cars = Better Deal
Car dealerships make their money in the Used Car Department.
There. I said it.
New cars have hardly any mark-up. And to add to that, the manufacturers give discounts to suppliers, employees, and then stack on steep rebates.
The manufacturers do not care if we lose money on these vehicles. They just want them sold so they can send in trucks with 22 more from the factory on a random Tuesday. And trust me… we lose money on these vehicles all the time!
But? If we sell enough of these new cars, the manufactures pay the dealerships BIG cheddar. Sometimes this cheddar is enough to take a new car department from red to black for the quarter. The dealership needs this money, and the manufacturers know we need this money to keep our doors open.
So the manufactures set ridiculous goals. That? Somehow? We manage to hit. Even though there are fourteen other Chevy dealerships within a 40-mile radius of ours. They pit us against each other. And again, they do not care. We hit them by going below invoice price on a lot of deals. Invoice is the price the dealership paid for the vehicle.
(YES, WE PAY FOR THESE CARS – NO, THEY DO NOT SHOW UP ON TRUCKS FOR FREE – YES, WE HAVE TO TAKE HOWEVER MANY THEY ALLOCATE TO THE DEALERSHIP EVEN IF WE DO NOT WANT THEM).
So buy a new car.
But if you really want the best possible deal… LEASE a new car.
Leasing a vehicle is the same as selling a vehicle in the eyes of the manufacturer and my boss. So the same process of giving-away-the-farm exists to move them off the lot.
If you can’t afford a new car payment… consider leasing.
With leasing, your monthly payment is typically less, you get the same great new car warranties (oftentimes these even pay for your oil changes), and your friends will always wonder how you can afford such an awesome car.
You pay for the use of the car right up front instead of paying for interest. Car loans stack interest in the front of your loan, and you pay very little for the value of the car. Many buyers are shocked three years into the loan to find out they still have a giant pay-off when they go to trade it in for a new car.
When you lease, say for 27 months, you can choose to buy out your lease. You’ve basically been renting to own the thing for the past two years, and very little of that rent-to-own payment was interest (unlike on a car loan).
Are you worried about your miles? Who cares! You’re planning to finance the residual value of the car anyway. OR? You take it the dealership, they pay off your residual value, and then they add it to their used car collection. A dealership can get you out of a lease – EVEN IF YOU ARE OVER MILES. We just buy the car on your behalf! Why? Because we need to sell you another new car! (see above)
Leasing is the way to go.
I want to sell you this car as much as you want to buy the thing.
I fully expect you to negotiate with me. And just so you know, I told my boss you could afford $50 less than whatever you told me.
CUSTOMER: I can afford $400 a month.
*walks into Sales Manager’s office*
ME TO MY BOSS: She can afford $350 a month.
Remember, I am your friend now. I’m emotionally invested in you, and SWEET MOTHER I NEED AT LEAST 10 CARS THIS MONTH!
Set the pen down and shut up.
Lazy car salesmen will show you the numbers on the vehicle right away.
I do not show the numbers until I have trial closed you so many times that I know you love this car more than anything.
Once I feel like you have picked the car for you, and you like me… I will show you numbers.
If you’re just out collecting numbers… you’ll know right away who sucks at their sales job. The guy you end up buying from was either A) really good at his job the first time, B) you were tired of shopping so he wore you down or, C) you went back to him because you felt more comfortable.
If you don’t feel comfortable WALK.
I am going to show you the numbers after I feel confident that you are a serious buyer AND YOU’RE BUYING FROM ME. I will show you these numbers, and then I will set my pen down and shut up. I am waiting for you to let this payment set in.
I feel like right now is when you are going to tell me the truth about what you can afford payment-wise. After all, I lied to my boss and you lied to me. Probably by about $50.
We say to each other, “Buyers are liars.”
We think you’re a liar, too. That is… until we get emotionally involved in your deal, and then we feel like we are besties. And then we’re shocked when we find out you’ve been lying to us this whole time.
So start talking. Don’t stand up and walk out. Tell me you want a different payment. Tell me now what you can really afford. Tell me you wanted more for that trade.
I wish you would have talked to me sooner. We would have saved a lot of time today.
So how do you get me to take you seriously?
DO. NOT. BE. A. DICK.
I won’t work with a dick. I’ll let you go out those front doors because my time matters, too. I am moving on to the next customer who I think will actually buy from me. And if we spend half a day driving cars, going over payments, and signing up on a car… I would rather do it with a nice customer.
I had a guy once tell my boss we have two invoice books. Fuck that guy. I don’t need your business. That shit makes the dealership not take you seriously.
But we expect you to negotiate. So do it! But when we come back and tell you that’s the best deal – THAT IS THE BEST DEAL. I can go back in again, but I’ll come back and tell you the same thing. That’s how you know you’ve arrived.
You’ll give me A+’s on all my surveys BECAUSE YOU WANT TO. Your salesman wants to be your new best friend. The good ones are emotionally involved in each deal. We want to be your Facebook friend after you’ve finished because we like your kids and dog, too.
- They don’t tell me how far we can go into a deal. The Sales Manager is a former Car Salesman. He knows I am working his desk harder than I am working you. So when I’m in his office for thirty minutes – WE ARE FIGHTING. I am begging him to get you to $350 a month anyway he can.
- Let the dealership run your credit. We have 30 banks competing for you. We can probably beat the rate at your credit union, and we don’t really care who finances you, and you probably don’t either.
- You do NOT have to buy a Kia if you have bad credit/no credit. Places like Taylor Kia “allegedly” (and by “allegedly” I mean my customers have experienced this for themselves) stuff you into a shitty car and tell you that’s your only choice. LIES. Go someplace reputable first, or you may wind up with a $456 car payment for 72 months on a $10,000 car.
- $7,000 cars tend to have a super high interest rate. Even if you have good credit. It’s just how it is.
- Try to get a hold of a supplier or employee number if you’re buying a new car. And tell me things. Recent college graduates, farm bureau members, military… all of these things qualify you for additional savings. This will save you thousands of dollars.
- If someone says, “Do you need to check with your husband/dad?” WALK. Women make the major purchasing decisions in most households. Anyone who can’t see that is old school and slimy.
I hope this helps!
If you have any questions for me, ask away!