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The Jordan Way - Used Vehicle Purchase

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Re: The Jordan Way - Used Vehicle Purchase

Postby bob_rx2000 » Tue Aug 02, 2011 6:30 am

Actually, Raycyrx, money is money, and the best way I ever saw a car bought was by the owner of the McDonald's in my home town. He walked into the local Ford / Lincoln dealership with a huge wad of $100 bills, went over to the Towncar that he wanted, asked for the owner, who in a dealership of that size was also the manager, and started throwing $100 bills on the hood. He bought the car (at the time about a $20k car) for six grand under the sticker.

I hate to say it this way, but the lowest man on the totem pole in a dealership is the salesman. When you talked about the (lack of) sales incentive on the Camry, what you were actually saying is that the dealer didn't let you know about any sales incentives on the Camry because the dealer didn't need to tell you, the cars were selling themselves. The dealer was just keeping the profit for himself. Please don't tell me you actually trust a car dealer? They are on par with lawyers. Look at the turnover on sales floors of the sales staff, for example.

You have to understand the 2 or 3 different transactions that are involved in getting a new car, you have to understand your position and you have to know the actual value of your vehicle and of the vehicle you are buying or you're going to get your knickers ripped, every single time.
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Re: The Jordan Way - Used Vehicle Purchase

Postby raycyrx » Tue Aug 02, 2011 7:34 am

Please don't tell me you actually trust a car dealer?

I trusted my second sales manager. Sales managers turn over at about the same rate as sales consultants.
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Re: The Jordan Way - Used Vehicle Purchase

Postby bob_rx2000 » Tue Aug 02, 2011 12:14 pm

raycyrx wrote:
Please don't tell me you actually trust a car dealer?

I trusted my second sales manager. Sales managers turn over at about the same rate as sales consultants.


In system stores, as the one you're speaking of happens to be, you're correct. I believe that all the dealerships in town are system stores, but in smaller areas you will still find dealerships that are not system stores, and of course, the small private used car operations usually aren't either. I believe the smaller dealerships experience somewhat less management turnover.

Just to keep math easy... let's assume that the dealership has a 5% rate on their floor plan financing, that they have a car that costs them $20k from the manufacturer, that the car has been on their lot for 90 days, and that they're going to sell it for $21,000. What does their profit look like, excluding the holdback, which is pure profit to the dealer? The interest is (30 days at 5% on $20k) or $83.34/month, the first 30 days are gratis from the manufacturer, so they have $166.68 tied up in the car. They have to pay the floor plan off, so when the car sells for $21k, they have $1000 - $166.68 or $833.32 in profit. I'm not worried about the dealer's kids starving, or the dealer not making the payments on his mansion, boat and airplane either. I suspect floor plan interest rates are below 5% these days too... Now, just for grins, a medium-sized dealership moves what, perhaps 300 cars a month?
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Re: The Jordan Way - Used Vehicle Purchase

Postby Happy Mom » Tue Aug 02, 2011 12:48 pm

I've never bought a used car, or as they say now, "pre-owned." I have bought several cars from various Dealerships and just finished helping my son buy a new car. We went to several Dealerships, heard so many blatant cliches', blatant untruths and observed how the salesmen acted in every instance. We collected all the information and then talked about it at home with Dr. Happy. My son wasn't sure whether he wanted to lease, buy used, or new. He got a first time car buyer offer at Basney so he decided to buy new. He put a sizable down payment and with .9% financing of the rest, he will pay only $323. in interest in 5 years... His monthly payments are lower than if he would have bought used or leased.
BTW, he bought a Honda Civic at Basney. I trust the salesman because we have bought four cars from him over a twenty-five year period and we love their service Dept.
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Re: The Jordan Way - Used Vehicle Purchase

Postby Kingsman » Tue Aug 02, 2011 3:08 pm

HM: Reminds me of going with my daughter to buy a new Civic at Basney 18 years ago. As I recall, the most contentious issue was dad wanting her to get an automatic trans. and daughter wanting a stick. Daughter won, of course.
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Re: The Jordan Way - Used Vehicle Purchase

Postby raycyrx » Tue Aug 02, 2011 5:48 pm

Now, just for grins, a medium-sized dealership moves what, perhaps 300 cars a month?

Can't speak for the other portions of the system, but Gates Toyota new cars didn't move that many cars in a month. Probably off by an order of magnitude.

As you mention, there are many more dealerships in they system. At the time, it was two new Chevy stores, plus the used car lots that were attached to each.


Bottom line, and back to the point, is that even at $800, asking for a couple hundred more off represents a huge percentage off compared to the miniscule percentage of the price that's being paid. It's like shopping for another tenth of a cent off of gas. Heck, we had people coming in from Chicago that were shopping their local dealers to get, "the best price." What did they spend in time and fuel to drive that far for something that's minutes away from them?

People say they hate car shopping, but really they are their own worst enemies in the process. Besides a myriad of other examples I could give you... why do you think car sales consultants have a reputation of lying? In our dealership, there were a couple who told doosies on a near constant basis. They also sold more than the other sales reps. In other words, their lying was rewarded, while honesty was not.

I'm not bitter, I'm just telling it like it was. I love half of it and hated half of it. At the same time, I learned a LOT in the process, that I've applied to many other facets of life. One of the biggest things I learned was not to approach a car deal with the attitude that they're out to get me or that the "best price" is the be all end all goal. Following those two simple lessons makes the process not only so much easier, but much more enjoyable.
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Re: The Jordan Way - Used Vehicle Purchase

Postby raycyrx » Tue Aug 02, 2011 5:52 pm

I trust the salesman because we have bought four cars from him over a twenty-five year period

That's the best method of picking a dealership and sales rep. Second best is asking for word of mouth. Facebook and other such venues make it too easy to ask for referrals to not use that tool.

In the absence of good information (not knowing any sales rep at a dealership that sells the car you want), walk in or call and ask the receptionist who he/she would buy their car from. The receptionist knows all at such organizations.
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Re: The Jordan Way - Used Vehicle Purchase

Postby John Q Public » Tue Aug 02, 2011 7:05 pm

raycyrx wrote:
I trust the salesman because we have bought four cars from him over a twenty-five year period

That's the best method of picking a dealership and sales rep. Second best is asking for word of mouth. Facebook and other such venues make it too easy to ask for referrals to not use that tool.

In the absence of good information (not knowing any sales rep at a dealership that sells the car you want), walk in or call and ask the receptionist who he/she would buy their car from. The receptionist knows all at such organizations.



Ray,
How about posting the top five or ten most underhanded tricks you've seen those liars and cheats do in order to get their hand deeper into the buyer's pocket? I think it might be entertaining, and useful for many.
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Re: The Jordan Way - Used Vehicle Purchase

Postby bob_rx2000 » Tue Aug 02, 2011 8:45 pm

John Q Public wrote:
raycyrx wrote:
I trust the salesman because we have bought four cars from him over a twenty-five year period

That's the best method of picking a dealership and sales rep. Second best is asking for word of mouth. Facebook and other such venues make it too easy to ask for referrals to not use that tool.

In the absence of good information (not knowing any sales rep at a dealership that sells the car you want), walk in or call and ask the receptionist who he/she would buy their car from. The receptionist knows all at such organizations.



Ray,
How about posting the top five or ten most underhanded tricks you've seen those liars and cheats do in order to get their hand deeper into the buyer's pocket? I think it might be entertaining, and useful for many.


How about the classic, "if you'll put down another $1000, I can reduce your payment by $15 a month" on a 42-month loan. That was actually tried on me back in 1983 when I bought my first new car, by the F&I guy at the dealership. (I borrowed from the credit union, had the deal already set, but the system insisted I sit through the F&I guy...)
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Re: The Jordan Way - Used Vehicle Purchase

Postby raycyrx » Tue Aug 02, 2011 9:10 pm

I'm afraid you're going to be disappointed. Most of the lies I witnessed were ones of exaggeration that really weren't necessary... embellishments if you will.

The best example I can come up with (it's been nearly 20 years) is this one:
We had a sales manager whose wife had recently purchased a Celica convertible. Now, another sales rep told a customer that it was HIS wife that had just bought the convertible and that she LOVED it. Now, that story may or may not have closed the deal and made the person want to buy THAT DAY, but it's a stretch to think that it had an effect on the profit earned.

Another sales rep literally got down on his hands and knees and begged a little old lady to buy from him that day. Again, change the price paid for the car? Don't think so.


Frankly, we didn't have much more than that going on that I witnessed. What I did see used by Jordan was low balling on a routine basis. I'd encounter this in one of two ways: 1) My customer went to shop me to make sure I was honest. 2) A Jordan customer was shopping them to be sure they were honest. The frustration of not getting customer 1 to buy from me was great, because I'd spent all the time selling them on the car and myself, but couldn't close them when they were with me. They'd then go to my competition and just as they're about to walk out the door from them they'd get shot a price that couldn't be met. They'd then go spend another hour or two in "the business office" (read: financing), and when they found out they weren't paying what they thought they were, negotiation would start all over again. Now, they'd either get so mad they'd come back to me, or they'd be so tired of the process by that point that they'd give up and pay the extra "couple hundred."

Customer 2 I would handle like this. First, they were already sold on the car. They'd have model, options, price, everything all picked out. They'd refuse to take a test drive because they'd already done so. There was nothing I could do to get them to spend a little time with me in a non-confrontational (read: negotiation) manner. They'd simply insist on wanting to know if we could meet their price. They'd shoot me a number. Again, I already knew what we could meet and what we couldn't meet, so if I knew it was a low ball, I'd do the following. I'd take out my business card and have them write that number on the card. I'd tell them, "we charge $29 for office fee for a new car deal, and $49 fee for a new car deal with trade in because the title work is double. Other than that and sales tax, we don't charge any more fees so the price we work from has no add ons. I can't meet that price. If Jordan tries to raise you from that price with ANY add ons, please come back and see me." Now, notice that I haven't given the customer what I can meet. I've simply told them their number can't be met without losing money and if Jordan is willing to lose money, I'll let them. One of two things would then happen. 1) Jordan would brow beat them in to raising their offer to what can be met. 2) They'd come back to see me and we'd work out a deal.

Low balling is probably the number one lie told by sales reps, and we weren't allowed to do it at Gates. That didn't mean it didn't happen, but it was against the rules. I personally never witnessed one of our sales reps do it... but again, that doesn't mean it didn't happen. For all I know, it was against the rules at Jordan too, but I didn't get low balled customer coming from Heart City or Signature Toyota... only Jordan. I'd certainly guess it happened much more on the Chevy or used lots at Gates. Toyota customers were generally much better informed than Chevy or used car customers.


There certainly are all kinds of HONEST methods of increasing profits on a low margin sale. Rust proofing and accessories are the best examples. Now, many people would say that rust proofing is a rip off. I'd disagree. First, I'd tell my customers that they weren't buying a product with Ziebart (our rust proofing vendor at the time), but rather they were buying a service. Ziebart's fine print says that unless you bring the car in for inspection once a year or so, their warranty is void. Well, I'd tell my customers that and that if they brought their car to Ziebart once a year, they'd get it detailed and fully inspected for rust... for free because they'd already paid for that service. Ziebart, meanwhile, would want to attach any rust problem spots (clogged drain holes and the like) so that they'd not have to pay out warranty money. Really it was a win-win all the way around. Another thing about rust proofing is I'd never sell it before the car. ALWAYS get the agreement on the car sale first and then ASK if their interested in Ziebart. All I'd do is say, "now that we've come to a (signed and approved) agreement on the car, I should ask... are you interested in rust proofing?" If they said no, I dropped the matter and told them I'd not bring it up again. If they asked for more info, I'd give them the above. Completely up to them.

I never tried to sell pinstriping, but I did have one customer ask me for it, so we put some on for him. Price was $95. Cost to us from the pin striper, $15. Sounds outrageous, but ask a jeweler for what kind of margin they get on a typical sale. That extra $80, again, might turn a $500 deal into a $580 deal, on a $15,000 purchase.
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