Confessions of a car salesman

http://www.edmunds.com/car-buying/confessions-of-a-car-salesman.phtml

225 60 14 years ago

dsrguru• 14 years ago

I actually read this before. It's a fun read for anyone who finds the psychology of persuasion and manipulation interesting. It probably helped me save over a thousand dollars on my family's last car purchase. If you just want the "what can I do to avoid getting cheated" summary, use one of the following options:

1. Have an agency buy your car for you. You might not save as much as you could if you really knew what you're doing, but you won't get taken advantage of this way.

2. If you want to do it yourself, call dealerships up on the phone and compare prices. You might have a lower chance of convincing them to sell you the car than if you went in person, but you'll make sure you won't get ripped off.

3. If you really want to go to the dealer in person (I have used this option successfully), do your research. That doesn't just mean knowing the MSRP and the dealer's invoice cost (much lower than the MSRP), but also looking on edmunds.com or elsewhere for the current promotions (called "dealer incentives") that the manufacturer is giving the dealer. You might not be able to find all of their incentives, but you can get close. When you're at the dealer, don't let the salesman express prices in terms of monthly financing. They'll use the four square technique and rip you off with 100% certainty. First agree on a price and then you can talk financing with the F&I guys in the back. To get the price you want, start really low. Offer a number around the invoice cost and be willing to go barely more than $500 over (at least for non-luxury cars). When they tell you that they won't make any profit that way, you tell them about the dealer incentives you know about. If you still meet with resistance, you can even hint that you suspect they have other incentives you aren't even aware about and that you really will leave the store before buying a car for much more than the invoice cost. If they still won't budge, try again at a different dealership. If you have trouble with this method, switch to #1 or #2.

wyclif• 14 years ago

Regarding your last "if they still won't budge" and going to a different dealership, that part can be your most powerful weapon: always be willing to walk. Walking away is an important ingredient in any kind of negotiation, not just car sales. Many times I've had the salesman call me later the same day with a better price a lot closer to what I'm willing to pay, especially if you visited the dealership at the end of the month.

GoodIntentions• 14 years ago

>> "especially if you visited the dealership at the end of the month."

surprised no one else has mentioned that tidbit. If the dealership closes out metrics at month-end, they'll be in a deal making frame of mind at that point. ++ if you can snag a salesperson that hasn't been doing well.

ddariod• 14 years ago

Dealers use term "Hold back" (dealer incentives) that will give them a hint You know how it works.

Also, has anybody used truecar.com - does it really work with prices or its just to get you in dealership to tell you they are out of that specific "deal".

ValG2• 14 years ago

truecar.com (and other similar sites), for better or worse, will be the downfall of the traditional car dealership... The price they give you is generally free (or very close) of ANY profit for the dealership.

They have a contract with the dealerships to honor the price, but b/c they cut so close to the bone there are instances where dealerships end up not honoring the price and try to negotiate anyways. I've seen it first hand, it doesn't work (people generally just walk out, as they should...)

WettowelReactor• 14 years ago

We used an agency to buy are last car and the process couldn't be any easier. Not sure how much better we could have done on our own but we trust the agency we used and compared to prices we where seeing online it seems that we got a very good deal.

ValG2• 14 years ago

Having worked in the industry, I know invoice price is not actually the lowest price they can go. All car manufactures have something called "dealer holdback" or some version of it (sometimes multiple under different names). They essentially charge the dealers $300-$1000+ extra for the car so that the invoice is artificially inflated; when the car sells, the manufacturer gives the dealership that money back. So even if they sell you a car for "invoice" they're still making money. The reason manufacturers do this is not necessarily sinister to try and rip people off, but it's to protect the dealers from themselves and to protect their brands. The trend is changing now, but up until 10-15 years ago, owners of car dealerships generally had NO formal education (many still don't). They would take deals and do things that would cause the dealerships to get into financial trouble; this way the manufacturer guaranteed the dealership made some money... Also, of course, the manufacturers always try to protect the perceived value of their brands through price controls

usaar333• 14 years ago

As much I'd love to read it myself, it's a tl;dr at 25,000+ words. Can anyone summarize?

softbuilder2• 14 years ago

Long-winded writer. Very rough summary: Use the internet.

softbuilder2• 14 years ago

Not sure why I got the downvotes. The author literally says the people who aren't getting screwed over are using the internet. And he took way too long to tell that story.

kabdib• 14 years ago

The book _Don't Get Taken Every Time_ helped me a lot, buying my /second/ car. I was a clueless geek buying my first, and got totally suckered.

I saw sales people as clueless and useless until I joined my first startup, whereupon we /needed/ them. Our CEO hired a sales guy, all smarmy and slimy, and that head sales guy hired a team (mostly old buddies he knew), and I saw a real sales force in action. I swear they could have sold enterprise licenses to a 'Notepad' clone, it was amazing. It didn't matter to them /what/ they sold, they just sold.

creamyhorror• 14 years ago

I'd like to hear a little how these pros operate, if you don't mind sparing the time. It sounds quite fascinating.

MSexton• 14 years ago

It's actually fairly well written. It's also from 2001, and I have heard elsewhere that a lot of it is outdated now, due to the increased use of the internet to research cars.

mtts• 14 years ago

No. It's not really an article to learn things from (if only because it's dated). It is, however, an entertaining read. Treat it as such: huddle up on the couch with it and enjoy.

alan_cx• 14 years ago

My best purchase:

Saw the car I wanted at £12,000. Went in to the dealer and test drove the car. Liked the car and said I would buy. (I should add that my wife was with me, and that she was fairly pregnant.)

Sat down to do the deal and as he was beginning to prepare the paperwork I offered the sales man £10,000. I told him I only had £10k available and that I had to buy a car today, and would £10k be acceptable?

Sales man went off to "ask his manager". He came back and offered £11,500.

I got up, smiled nicely and said, "OK, no problem, I realise I'm offering too little but its all I have. A pity, but I'll have look else where as I only have £10k, time is short and I will need to look elsewhere as I need a car today. Thanks for your time". (Im sure I actually said that more concisely than I just typed it!!) I was polite, respectful of his position but was equally quite prepared to walk.

He jumped up and said he would ask his manager again. I sat back down and he came back offering £11,250. I repeated the same lines (ish) as before. In other words, I only have £10k and I had to seal a deal today... Off he went again. This loop went on until he eventually offered £10,500. By this time, I was kind of agitated because time was running out, and I didn't want to waste time on a deal that might not happen. I was honestly keen to move on and try else where. At that point I looked in my wallet and pulled out a £20 note, and offered £10,020. He looked beat and accepted the £10k. He probably look as beat as I looked surprised.

So, I had to go off and pick up £1000 for a deposit, and because my wife was pregnant, she decided to stay in the comfy chair in the show room. Shortly later, I came back with the deposit, and completed the deal.

Once we left, my wife told me what the sales man said while I was away. The sales man turned to my wife and said, "Wow, I have never deal with such a hard negotiator in my career. I've never given any one £2k off a sale, let alone on a £12k car." To which my wife replied, "He wasn't negotiating, everything he said was completely true. We do only have £10k, and we do have to by a car today. He was not negotiating, that was the genuine position". Apparently, he look relieved to know that.

What I learned:

I didn't really car want car I bought. Any car in its class was good enough. I was not in "love" with a particular car.

I had a fixed budged that could not be increased. I do not do credit in any way, ever.

One key bit I thought about much later on was that the car I wanted to buy was not the same make as the dealer's franchise. It was a Peugeot dealer selling a part exchanged Ford. However, the asking price was perfectly fair . As it stood, £12k was a reasonable asking price.

The truth is, I was quite prepared to walk, in fact, I was on a hair trigger to walk because I had only half a day left to do a deal.

You chaps might well have other things to add.

Anyway, my advice would be : Don't be in love with a particular car, have a fixed budged, make the dealer know you are ready to buy, but equally be prepared to walk. Lastly, try to find a car in a dealer which in not the same make as that car you want. Find a VW in a Ford dealer, for example.

This was not a method, is was necessity. But now is is my method, and has worked for me several times since, and not just with car buying. I have also helped friends buy cars and done similar deals for them.

One last thing, sorry, I was after a second hand car, not a new one. Obviously a key difference. Even so, my experience still might help others out buying.

Sorry for the long post!!!!

Edit: Jeez, that was long....

rdl• 14 years ago

Used cars have way more price flexibility than new cars, too. The dealer already made some money on the trade-in with the seller.

spydum• 14 years ago

Yes, essentially the TL;DR: Dont get emotionally involved in the purchase, and know what you can afford, and how much it should cost. You should come out with a fair deal.

rdtsc• 14 years ago

Here is what I learned.

You can do this only if you have a particular car + all configurations in mind and won't budge. Dealers know this "trick" and what they do when you tell them you only have $10k is that they sell you an $8k car for $10k. That's how it works. So be careful. Pick the car first then say how much you only have.

Another problem I found is that if you want a particular car model and you don't live a in a large metropolitan area you might only have 3 or 4 places to choose from. They know it too. You walk away from all 3 or 4 places now you have to drive 100 miles to another city perhaps.

Another nasty thing, car salesmen in an area, know each other. A lot of dealerships are revolving doors and salesmen just rotate from one to another. When you go to one and tell them the other dealership's price, they say "Oh Joe, he is so silly, he used to work here, we can do better, we can give you $100 less".

In the end of the day you also don't know how pressed they are to sell that car. If there is a line at the door waiting to pay $1000 more for it. You'll just have to walk away without a car.

One more thing. Car options. A lot dealerships will put "crap" on your car. Nitrogen filled tires. Fancy decals. Anti-fairy-dust coatings. All that cost maybe $50 dollars or so but tell you all those things cost $1000 more, but they are "giving them away" for $500, and they put them standard on every car. So the price they quoted you through email, doesn't exist because all cars have these extra features. So don't fall into this one.

philjohn• 14 years ago

Luckily having to drive 100 miles is less commonplace in a small country such as the UK where you're rarely more than an hour from another major city (discounting parts of Wales and the Scottish Highlands).

slavak• 14 years ago

I find a good rule of thumb for any kind of negotiation is this: Don't bluff - be actually prepared to walk away if you're not getting the deal you want. You don't have to walk away in a huff - being super nice about it is fine. If it gets to that, you'll often get offered a better deal once you're actually heading for the door.

jcampbell1• 14 years ago

> he sales man turned to my wife and said, "Wow, I have never deal with such a hard negotiator in my career. I've never given any one £2k off a sale, let alone on a £12k car."

This is standard sales line. It makes the customer feel like a hero, and costs the salesman nothing. I don't mean to burst your bubble, but your story is that you bought a car for 20% less than the marked price, and a salesman told you that was the best deal he had ever seen.

rkalla4• 14 years ago

Having read this piece before as well (it was very interesting) there is no surprise that the classic car-buying experience is so combative... it would be like going to a shark-petting zoo where you are required to cover yourself in blood before entering.

That being said, I'll share two stories incase they help anyone...

[1] I have 5 friends (from different social circles and age groups) that have used Carmax to both buy and sell their cars (new and used) -- they have ALL come back with praise for the company on the process, even after comparing car prices online diligently before heading in. Similar the Saturn promise of "no haggling" this shopping experience seems to be fairly solid. I have not done it yet, only what I have heard.

[2] My best experience buying 2 new cars as well as a friend buying 2 new Subaru's that I shared my strategy with went as follows:

Read owner's forums for the car(s) you are considering; Edmunds and standalone owner forums were great for this.

Get a sense for the average price people are paying for the cars around the country. If you see a range of $33,000 to $36,000 then use an average of $35,000 (for example)

Call a local dealership, tell them the car and trimline you want and exactly how much you will spend OUT THE DOOR (always out-the-door) and to call you back if they can do it.

Sit at home and wait for a phone call.

Go in, look at the car, sign the papers and drive home.

I had two trade-ins when I did my cars so my out-the-door price was lower by how much I estimated a fair trade-in value for my used car was (using kbb.com and edmunds.com and some common sense)

Overall the ease of the process was great with no BS and no haggling.

If you like haggling or your goal in buying a new car is to mentally crush the sales agent, then you won't need this strategy... but if you hate wasting your time and want to get a fair price, it works wonderfully.

adestefan2• 14 years ago

1. I've found CarMax to be very fair with regards to selling them vehicles. Process was easy and cash out the door is always nice. I've never purchased from them though. As for Saturn, they're now defunct. That was probably more to do with the quality of their vehicles in the past 5 years than the buying experience.

2. Don't waste time with phone calls. The classic way is dealing via fax, but now it's easier to use email. In my last purchase I knew the model and trim level I wanted, but didn't care about color. I emailed every dealership within a ~1.5 hour trip from my house and told them what I wanted and how much I was offering. I got someone about an hour away to agree. The dealer 15 minutes from my house agreed to the same price after I told them.

edlucas• 14 years ago

I've just been learning quite a bit about the business of car sales. Car dealerships make most of their profit in the parts and service departments of their store, so it's definitely in your favor to run your best offer past your local dealership. They are more likely to take a smaller profit on your purchase in the hopes of having you get your scheduled maintenance performed in their shop.

dripton• 14 years ago

I found CarMax to be pleasant to deal with, but they have awful prices, both when buying and selling. For example, they offered me $5000 for my car, which I ended up selling pretty easily to some guy on Craigslist for $7500. Of course there's more hassle with a private sale, but not $2500 worth of hassle.

ben10402• 14 years ago

Last car I bought was a Scion, and they also have the no-haggle policy. One night I was browsing dealerships' inventory online, and spotted a model I liked. Called the dealer the next morning at 8, was driving my new car at 10.

The only part of the process that sucked was where the F&I guy put a serious hard sell on me to try to get me to buy gap insurance and extended warranty.

Everything else went smoothly and the dealer even gave me a higher price for the trade than I was expecting. Their Internet access was down when they were trying to look up blue book price, and so the guy just made up an opening offer that was $500 more than I was hoping to get.

rkalla4• 14 years ago

Didn't know Scion did the no-haggle thing, thanks for the heads up on that. Also imagine the F&I hardsell is how they make up the difference... was the sales agent you were working with responsive/nice/etc or did he seem impatient and wanted to get the deal wrapped up quickly?

sukuriant4• 14 years ago

For what it's worth, GAP is a really good insurance to get. It protects you from other people hitting you the say after you buy your car/any time you're upside down; and it doesn't cost much more for the peace of mind. I know some people think nothing will happen to them, but personally I wouldn't want 10k hanging over my head in some unlucky situation.

larrys3• 14 years ago

"no-haggle policy."

No haggle is only good if you are a below average negotiator. If you are above average or good you will get a better deal negotiating since others will overpay.

cynicalkane• 14 years ago

When I tried to use Carmax it was very pricey. As in, it was only a small bit cheaper than the retail prices offered by dealers, retail prices that everyone knows you can take thousands off.

rkalla4• 14 years ago

If you don't mind sharing, what car were you looking at?

rkudeshi• 14 years ago

Might want to add (2001) to the title.

The process has changed dramatically in the last 10 years (notably, the rise of email negotiating).

Also, here's the 2009 update to the article: http://www.edmunds.com/car-buying/confessions-of-a-car-sales...

ghaff• 14 years ago

When I bought my last car, I was rather surprised (though probably shouldn't have been) by how unwilling dealerships were to quote prices by email or phone. The article gives you a pretty good indication of why but, nonetheless, two different dealers lost my potential business by basically refusing to deal with me except by making an appointment at the dealership.

I did end up dealing with a third dealership in person but only after confirming the availability of a model shown with a price in their Internet inventory. The in-person process was still a bit icky but I knew I was getting a good price on the car. I just deflected all attempts to play the monthly payment game. And they ended up giving me a good enough price on my trade-in that it wasn't worth additional fussing with.

Know the facts. Know what you're willing/able to pay. Separate transactions whenever possible. Ideally, don't be in a hurry.

larrys3• 14 years ago

"unwilling dealerships were to quote prices by email or phone"

Several reasons. One is they can't close you over the phone or by email. Other is they open themselves up to other dealers quoting a price that they won't hold once you arrive at the dealer. And then that dealer gets a chance to close them (after bullshitting their way out of the lie).

That said I've bought several cars by phone and have received prices by email but get the best deals in person. That way you are dangling a sale in front of them and they tend not to want you to walk out the door and go elsewhere.

In sales the more time somebody invests (either buyer or seller) the less likely they are to walk away from something.

j45• 14 years ago

Easily one of the most interesting reads I've had in a while.

Didn't give me as many hard insights on how to turn the tables on the shark behaviour but definitely showed some places to stand your ground or push back.

The best tip seems to be what I've heard before: Negotiate only by phone.

mikepmalai• 14 years ago

Best tips I learned:

1. Call / email for price quotes - The biggest dealers (due to much higher volume/scale) tend to have no problem quoting you a price over the phone. Those that can't compete on price, tend to tell you to come to the dealer for a quote. If a dealer doesn't give you a price over the phone, ask them if they would like a call back once you have a price quote in hand so they have an opportunity to counter.

2. Be flexible - Don't preemptively narrow down the inventory available to you with specific features/colors. Get price quotes for the make/model you're interested in first and then start asking about feature/color/service differences, etc.

3. Set a tight timeline - I'll usually call around in the morning and tell dealers up front I'm going to buy this afternoon. I tend to get the most competitive quotes this way and it gives the dealer an opportunity to quote a price based on the inventory on hand rather than a general quote.

4. Get counter offers - Once you have a set of price quotes, call the dealers again and get counter offers for your best quote. Some big dealers are so confident in their offer they'll encourage you to call around and see if anyone can match it. You WANT dealers to start dropping out and saying they can't meet that price. If everyone counters your lowest quote, that price quote was too high.

I've learned that dealers usually know which competitor in their area offers the best price...you just have to spend a little time wringing that out.

vaksel2• 14 years ago

the key to get a good deal is to just use email..contact 30 dealerships and ask whats the lowest they'd be willing to go on X.

then just go back and forth with the lowest #...until you are left with one dealer

pkulak2• 14 years ago

Good God do they ever hate this. haha

vaksel2• 14 years ago

not really, most dealerships have an internet department with dedicated people that deal with this.

and it's much easier to negotiate a price, where they just email you back, instead of making you wait while they go and watch TV in the break room(while they "talk" to their manager)

pkulak2• 14 years ago

The last time I bought a car I got to screw one dealer and made another dealer's day. This was last year right after the Japanese tsunami when used Priuses skyrocketed in value. In one week my model-one (with no cruise control, which I HATED) shot up by about 6 grand, to a full 2 grand more than I even paid on it. I decided right then to throw it on Craigslist at KBB, and if someone wanted it for exactly KBB, it's theirs.

So, I immediately get like 5 calls and take the ad. The first guy to show up says he owns an RV dealership, but he really just works at a used-car dealership. They all sit on CL during their downtime looking for cars to buy. The guy tried for about an hour to talk me down, but I had other people literally lined up to buy for my asking price, so I wasn't going to budge a penny. He finally bought for what I was asking, but wasn't too happy about it. In fact, I'm not sure he even noticed that it didn't have cruise. That could have ended up being tricky to sell..

But, the other end of that is that I then needed a new car. I was going to buy a non-hybrid, but after calling a couple dealerships (at 8 in the morning, the benefits of having a 2-year-old son) one had one new Prius on the lot from a sale that had been backed out of the night before. So, I just went in and paid sticker. I got way too much for my used car, probably paid way to much for the new car, but on balance, I'd say I was even. Plus, I got a new car with cruise control, so I was happy.

Spig• 14 years ago

My best new car buying experience was using the methods described in the book "Car Buyer's and Leaser's Negotiating Bible" by William Bragg. The book is out of print but basically consisted of faxing/emailing dealerships within a 300-mile radius and asking for a quote on your chosen vehicle. Then, after getting the lowest quote, inform the higher dealerships and they almost always go lower. Repeat as needed.

http://www.amazon.com/Buyers-Leasers-Negotiating-Bible-Editi...

nate• 14 years ago

I've seen the "sell me this pen" type of test before. Got me thinking...

I wonder if anyone would like to play a competitive game where we pick a commodity like a pen or anything really, and we challenge each other to see who can get the most online sales in a timed round.

It's a twist on what a bunch of companies are already trying to do. E.g. 37signals rewarding the top affiliate with an iPad.

But I'm curious if anyone would play if it was a bit more generalized and community controlled.

Each round we pick some different product or company and we compete to see who can sell the most online. Not sure how to track it best. Maybe we stick to stuff on Amazon. But how to verify the sales so that it can't be cheated with photoshop?

bartonfink• 14 years ago

The sales equivalent of a hackathon? That sounds incredibly interesting.

sgonyea• 14 years ago

Just use TrueCar and skip the salesman?

murrain• 14 years ago

I used to be the Internet Sales Manager for a dealership in the bay area and I can second that TrueCar is a powerful asset for the consumer.

When a dealership signs up with TrueCar they agree to give full access to their sales database. Now TrueCar has access to every car you buy and sell, new or used. They then aggregate this data to create their pricing information.

bannerts• 14 years ago

One detail I have noticed in the car buying process is related to financing the vehicle through the car manufacturers financing service. I am unaware of exact rules at all locations but this is how it worked at one my friend purchased a car on.

The dealership would offer a rebate only if you financed it through their service. Anyhow, the rates they gave were horrible but like any loan you have the ability to pay it off in the near future. Sometimes this can be used to get a better price on the vehicle by making the dealership think they are going to make a lot of money on the loan in the long run when in fact you are actually just going to pay it off or refinance it in a few months (some deals state that you can't refinance for like 2 months or something from my understanding).

This process doesn't always work though because it involves more more people dealing with your loan, of which each of them usually cost some small amount of money.

RollAHardSix• 14 years ago

I've learned to never buy from a dealer. Finding someone selling a car that is 3-5 years old, decent mileage, and a decent price is by no means as difficult as people believe.

Bought my first car, cash, for 5000 in 2006 (it was a 2000 Mazda Protege); ran it until 2012 so that's 800-900 per year). Then I sold it for 2100, with it having 160,000 miles on it.

I then bought a 1999, cutlass with 32,000 miles but a non-working radio for 2200. (radio got me a discount) Both vehicles retain value extremely well, the cutlass for instance is still valued at 3300. I'm expecting to flip my cutlass in no less than 6 but probably not more than 10 years for around 2000 dollars again. Maybe 2200, maybe 1800.

You just have to know the value of your car, what you want, and how/when to sell. Tip: Sell in Feb/March/April when many high-schools will be sending a fresh batch of road-rage demons on the roads in the coming months. Parents and poor people make the best bait. You can often 'see' where they will haggle too. I posted an ad at 2200, knowing I'd get an offer of 2000, and then negotiated the sale back up to 2100. Predictable.

sukuriant4• 14 years ago

Remember CarFAQs...

ylem• 14 years ago

I found TrueCar to be very useful in getting to know the price range of car sales near me--in the end, I went with a local dealership--but knowing the prices helped me a lot in my negotiations.

Confessions of a car salesman

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