Car salesmen - pricing themselves out of their own market


Last Updated: 2012-12-29 02:40:12
  1. Medion

    Medion Well-Known Member

    I suppose this is the right place for such an off-topic topic, so here goes.

    Both my wife and I were in the market for new cars. She wanted the Ford Edge, and I wanted the Fusion. Before anyone asks, no, we're not Ford people. But it is funny how this worked out, because nearly ten years ago she wanted a Sunfire and I wanted a Grand-Am (both Pontiacs). Between then and now, we've generally been on different makes.

    I'm not a haggler. So, I assumed for her Edge we'd pay sticker (minus incentives, then add in TTL) minus trade-in based on KBB. Since no haggling would be involved, she went to the dealership herself. Sticker on the Edge she wanted was $41,400 (Limited nearly fully loaded). They offered her $14,000 in trade for her 2010 Mazda 3 5-door grand touring fully loaded (minus navigation). She called me and I said "come home now."

    When she came home, I looked at KBB and saw that they offered her $4.6k below trade in. I also saw that they marked up the sticker, gave her the $3k in incentives available at the time (counting military discount, since we're dual military), and wanted her to pay $40,100. That meant they marked up the price $2k to pad their profit. The next day I went in there with her and told them that they had to offer us fair trade-in before we even start haggling on anything else. They immediately went up to $17k. I said, "No, KBB says $18.6k, that's what we'll take." They said, "Oh, we use NADA, and it says $16.5k." I pulled out my phone and pulled up NADA, which said $18.3k, then walked out. I don't like being lied to. Business is business, but conduct it ethically.

    Well, I bank (and insure) through USAA. They turned me on to their car buying service. We tried it and got an offer on a Ford Edge, same specs, for $37.5k BEFORE incentives. We custom ordered it (6-8 week wait, no dealer emblem, less than 15 miles, no test drives from other people, etc.). Incentives can bring it down another $2-3k. Man, I wish I had considered internet ordering before. Cheaper prices, no haggling, and best of all, no car salesman!

    So, I wanted to do the same for my Fusion, but I had promised the prior salesman that they would get first crack at me, despite my disagreement with them. I'm a man of my word, so I had to follow through. I did some research and specced out the Fusion I wanted. Sticker was $27.2k. I told them that I'd pay $25.3k before incentives, which is $300 over invoice. I also told them that they would give me $11.5k for my 2008 Pontiac G6 GT (high miles), because that is what NADA states, and according to them, that's what they use as a reference. I then said, "Yes or no, no haggling, you saw me walk before, I will walk again."

    They're supposed to have an answer for me tomorrow. Funny thing is, there's a moral to this story. Don't cheat a guaranteed customer! When we walked in, they had two guaranteed sales at STICKER price. We were IDIOTS! And what did they do? They tried to pad the sale with extra profit on both ends. Not the normal $1k or so, but nearly $7k! Even we weren't that dumb! So they converted us to internet buyers, immediately lost one sale, and likely will lose the 2nd. If they get the 2nd sale, they'll be selling it just above invoice, meaning nowhere near the commission they would have originally received.

    So let's do the math. They tried to pad one sale by $4.6k on one end and $2k on another. By doing so, they lost out on a sale of $3.5k over invoice, a 2nd sale of $2k over invoice (keep in mind that with dealer holdbacks, they get more than that), and converted two idiots into internet buyers for life which further screws over car salesmen. Good job Roundtree Ford!

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    junebug1701, cds0699 and Gmash like this.
  2. Martimus

    Martimus One bite at a time... Moderator

    Sounds to me like a stealership issue...

    Typically when I run into dealerships where management is simply that greedy, I walk and go find another. I checked Google and it looks like there are several in your area.

    Since you were able to find a good deal through a car buying service my advise, of course, is moot...
  3. dan330

    dan330 Well-Known Member

    you are too nice.. working with MSRP!

    i refuse to.. I want invoice price. and i know they still make good profit!

    i always find at least 3 dealerships.. and have them fight it out... have them bidding against each other... for the price.

    for the trade in:
    then go to autotrader to find out what fair value is...
    what bluebook is..
    and take a bid for something inbetween

    i get a finance approval for best interest online.. and may credit union.
    have the dealer beat it.
  4. Medion

    Medion Well-Known Member

    To me, that was too much work. I was paying for convenience. But now, I'm doing even better. USAA's car buying service is free to the consumer, and the dealer is allowed to price the vehicle at $300 over invoice before incentives, but no higher. We got the Edge at $268 over Invoice, and will likely try them for the Fusion as well. The Edge purchase literally took minutes.

    For people who don't use USAA, you can also do Carsdirect. Their deals aren't as good as USAA, but they're close (usually $400-$500 over invoice). They charge the dealer, not you.
  5. LV777

    LV777 Member

    It really is unbelievable how salesmen react to someone trying to deal with them in an honest and respectful way. I went in with my oldest daughter to deal with them for the first time and it was bad, she left in tears. She could not understand why after I offered a price and asked them to give me their best price they kept screwing around and offering different prices as we got closer to the exit to leave. We went down the street and when I said the same thing to a different salesman, he did give me an honest price. I had the same type of experience when I bought my 2011 Ford Fiesta last November. Finally found a dealer who gave it to me at his invoice. I do believe a dealership can live on their holdbacks.
  6. dan330

    dan330 Well-Known Member

    yeah.. i especially hate.. i mean reallllly HATE...

    how they want to only talk about monthly payments!!!! oh.. that just drives me batty!... i wanted to punch him in the face and his manager!
    i want to talk about the full price of the car!!! but no.. they would not..

    till i got up and started walking out... then they wanted to throw full prices to me... but to late.

    all the way to the car!

    even called me on my cell...

    assholes!
  7. snapper.fishes

    snapper.fishes Well-Known Member

    I have had several experience like this, but on game consoles instead of cars. I went to a local shop that I had been a customer for a long time and bought a game console, thinking that at the very least it will be about the same as buying one from Toy "R" Us. Wrong. It was at least 20% more expensive.

    I am still friend with the manager, and he still give me discounts on random stuff from time to time, but I won't be buying another piece of expensive electronic equipment from him any more.
  8. gallandof

    gallandof Well-Known Member

    this is what im afraid of. I've never really purchased a new car, ive always gone through friends and family in used dealerships.

    But im currently in the market for a new car, but only research ive done id online and priced through the manufacturer configurators (how great would that be for android, choose your specs *drool*) and have no other point of reference. are dealers usually pretty good about offering the same price as the configurator? or is that something to try and talk down?

    (im looking at the new 2011 mustang GT, or a 2011 subaru WRX. not sure if experiences differ through manu.)
  9. Medion

    Medion Well-Known Member

    First, open up the car configuration of your choice, and make the car of your dreams. Then, open up Cars for Sale - Buy a New or Used Car Online - CarsDirect in a new tab (if you're a USAA member, use them instead). Configure the same car, then request a quote. Carsdirect will have someone do the haggling for you, then call you with the price (generally much lower than MSRP). They'll offer to deliver the car to your home or place of work, or let you pick it up at a dealership from a CD rep, NOT a salesman. Handle the financing through your local bank and credit union. CD will also help you on your trade in, or you can sell it privately.

    Many cars salesmen try the "4 corners" approach. They distract you with the down payment and monthly payment to get your attention away from the cost of the car and trade in. This lets them fleece you. By doing what I said above, you avoid the salesman and their finance managers, allowing you to beat this scam. You'll save a ton of money.
    Gmash likes this.
  10. Martimus

    Martimus One bite at a time... Moderator


    You'll be much happier with the Mustang! :D (Note: I'm currently on my fifth Mustang so I may be a wee bit biased! :p).

    Personally I swear by the car buying services nowadays. I work with my local Credit Union and have no issues whatsoever. Got my cars at reasonable prices and no playing games at the stealerships...
  11. thatperson

    thatperson Well-Known Member

    I am nowhere near forgiving to the salemen. I walk in after researching the options and prices and give them a number, if they accept, I buy. If they try to haggle and do the numbers game I walk out. I just love how they act like they are your friend but are stealing your wallet while giving you a big smile.
  12. cds0699

    cds0699 Well-Known Member

    Glad you ended up getting a good deal. I sold cars for 5 years, and this exact story is why I'm very picky with who I will sell cars for. Some dealers are straight up and good dealers, and thats who I'll work for... not shady stuff like what you described. Always be sure to check around at at least 2-3 dealers before actually deciding to buy, often times you can see exactly what the difference is from dealer to dealer.

    Besides the salesman is doing it all wrong, so dumb. The key in this day and age is straight up tell the customer "We're a business, we have overhead, I'll sell it to you for $x over invoice before incentives and thats that" .... volume over profit margin, sell the car, move the unit, and get on to the next customer (get a ton more referrals that way too :) ) .
  13. dan330

    dan330 Well-Known Member

    oh yeah.. the friend type talk.. that reminds me..

    one time I was helping my dad buy a new nissan truck. 2 hrs...
    we are down to $400 difference.

    she says... we are friends.. i have been helping you for 2 hrs now. worked with you down to only $400. cant you give give me $400?

    i looked at her.. i was floored... it was a blank stair.. was not sure if i heard that right.

    i finally composed myself.
    and said... i have some great friends.. friends from back to jr high and we went to college together. if they wanted $400.. it would no problem. a gift if they really wanted it.

    you... i have known for one of the most painful 2 hrs of my life..
    you want me to give you $400 of my dad's money??
    i waited for her response...

    she said with a straight face... "yes"

    you know.. if she had .. changed her tune and told me that there was no room.. or the boss would not do it... or it was at rock bottom... anything... but to stick with "because we are friends"

    told her... because we are such good friends.. if it would hurt you so bad to sell to me at $400 more discount. lets just call it off.
    told my dad that we are done.. and lets go grab some coffee.
    we left.


    she called .. next day.. to say.. they would be happy to meet the with the $400 discount. I said NO... sorry friend...waste my time to go get my dad and drive down there again .. unless you knock off another $100. she said ..OK.

    i know i am an ass-hole when it comes to negotiations. i feel bad for sales rep that get to help me. funny thing... I am a sales rep too. thing is.. i warn them when we start. dont bullshit a bullshiter and we will be fine.
  14. cds0699

    cds0699 Well-Known Member

    Funny thing is, i'd have you in and out in like 30 min - 1 hour tops. I'd happily strip it down if I had to... I was always about my minimum commissions and volume bonuses :)

    Salesmen either "get it" or they fail.
    Snow_Fox likes this.
  15. chrlswltrs

    chrlswltrs Well-Known Member

    I just want everyone to know that I am a car salesman, and I do work for a Ford dealership. There are a lot of dishonest dealerships and salesmen out there. BUT, THERE ARE HONEST ONES ALSO!!! The auto industry has screwed itself. On average there is a 7% markup in a new car, and most new car dealerships lose money, it is the used car department that keeps them open. Jewelry has an average of 300% markup but does anyone haggle jewelry prices... no.

    Anyways, for the honest ones, just remember if you like the salesman you are dealing with, this is how we feed our families. MSRP is not a rip off, and if you pay invoice the dealership makes $0 (would your business give away it's product for zero profit?). There is no hidden profit. The salesman that sold you the car makes very little, not really even worth a days work, but we still appreciate your business.

    Here is the big secret. Dealerships will sell some cars at invoice ($0 profit) because they have numbers they need to hit. The more they sell the higher up they are on the list for the cars they want -> the cars customers want -> the more they sell -> etc... More customers come in and a lot of people come in for the new car selection and end up buying used -> dealership makes some money.

    I have NEVER lied to a customer and NEVER will. Anyone near Seattle that wants to buy a Ford or Hyundai or a used car let me know. I work at Ford of Kirkland. I guarantee you will never have a better car buying experience, and at my dealership, you ask, we will show you invoice. We are a very high volume, low profit new car dealership. PM me on here or give your friends my email and I will hook you up.

    cwalters@fordofkirkland.com

    Even if you don't live near me, feel free to email or pm me. I love the Android community and I'll help out anyone on this site that has questions
    tube517 likes this.
  16. chrlswltrs

    chrlswltrs Well-Known Member

    Same way... I just got back into selling cars and I am very picky who I will work for. I won't be pushy with anyone. If they don't LOVE the car, I will tell them to keep looking until they find the one they want. I think about happy customers, and future business, not just right then and a big commission.
  17. Snow_Fox

    Snow_Fox Well-Known Member

    cds0699

    I have to give you some cred for that.

    When I sold phones I didn't BS around.. We couldn't negotiate price but, I actually was very happy to leave my job because, my work was so obsessed with us trying to tack on all this extra crap.

    I hate being forced to push crap my customer didn't need..

    Likewise if I was working comission that was negotiable, I wouldn't really screw around with numbers.. "here is your offer take it or leave it" done.

    Customers hate games.. they hate salesmen raping their ear with pleas for warranty purchases or what a "great deal" they are getting ect ect.

    Why is it even if you want to provide great support for your customer, your company won't let you?

    I loved offering accessories to my customers if it was beneficial to the customer and the customer wanted it.. if they didn't that was their business...
  18. jamor

    jamor Well-Known Member

    It was naive of you going in to think that you would get top dollar for your trade in.

    That is how trade ins work. They give you less than fair market value so that they can turn a small profit.

    If you don't like it, you have to sell it yourself.
  19. Medion

    Medion Well-Known Member

    @chrlswltrs

    I'm sorry, but I'm going to call BS on one of your points.

    Holdbacks. You say that you word for a Ford dealership. Good, because that's one that I know. Ford offers a 3% holdback, so if you sell a car at invoice, you get that 3% back at the next quarter. There are also other holdbacks and direct manufacturer to dealer incentives. An example would be a car that has a sticker of $22,995. Invoice may be $21,488, but after the holdbacks, the true cost to the dealer would be about $20,125. You can sell a car at invoice, or even below it, and still make a profit. The debate is whether or not this profit is substantial enough to pay the bills and still offer the salesman a worthy commission.

    Regardless, we offered sticker, on both cars. And when we did? They raised the sticker price. I don't negotiate when the other party wants to move the goalposts.
  20. Outlaw71

    Outlaw71 Well-Known Member

    Personally I feel like a trade-in is a waste of money. Yes you have to be a little patient if you go the 'personal sale' route, but you will almost always come out ahead that way.

    Say your car is worth $15,000 blue book, put it in the Trader for $15,500 and let the buyer who's really interested talk you down $500 bucks. Now they feel good about getting it for less than you were asking, and you got rid of it for what it was worth... win/win. Now you have $15,000 grand cash to put down on your next car, that's always a bennefit when you walk onto a lot. When you pull your car onto the lot they may try to tell you this or that is wrong with it, try to haggle with you over price, etc... because they know they're going to have to try and sell it for $15,000, so they don't want to give you $15,000 naturally.

    But $15,000 dollars cash is worth $15,000 dollars no matter where you go. So now you've cut out the headache of fighting over what your car is worth, and that salesman is drooling over that 15 grand in your hand because he want's to put it in his pocket, so he's going to try just a little harder to get you to sign that paper. Hopefully for you that little bit harder involves coming down a little more on the price, not blowing more smoke up your butt. Just depends on the salesman.


    Oh and I just love those salesmen who talk things over with you for an hour or two, and then when you tell them, "ok well I will think this offer over and I have a few more places on my list that I'm going to check out", and then the guy says, "Ok well that offer is only good while you're on this lot. As soon as you drive off the deal is off"... Anytime I've ever heard that out of a salesman I've walked off the lot and not come back. If the deal they were offering was fair, it should stand no matter if I sign the papers right then, or two weeks from then. I get the strong impression they're scared you'll find out you can get a better deal when they say something like that to me if I decide against buying right then and there.

    I know it's a rule of thumb in sales that your percentages go way down if you let them leave without making the sale. But for big ticket items like automobiles and homes, I expect to be given time to think it over and compare prices. Anytime I'm pressured into spending that kind of money NOW, I walk away.
  21. Medion

    Medion Well-Known Member

    There are benefits to a trade-in, and I'll give you an example. As a for instance, my car has a KBB trade-in value of $11,775, but a private party sell vale of $13,575. Right off the bat, it looks like an extra $2k for selling private party, but wait, there's more!

    In most states, including mine, you pay tax not on the price of the vehicle, but on the price of the vehicle MINUS trade-in. In my parish (Louisiana version of a county), sales tax is 8.6%. That mean's my trade-in has an effective value of $12,787.65. That narrows the gap considerably.

    When you then factor in notarizing the title, the paperwork, dealing with potential customers, being haggled down, and the liability (if the car goes bad, who will the customer blame?), maybe a trade-in isn't such a bad idea.
  22. jamor

    jamor Well-Known Member

    Exactly right. The lazy way out isn't going to give you top dollar.

    Dealerships can't turn around cars for $0. I would have offered below kbb/nada too if I worked at one.
  23. Medion

    Medion Well-Known Member

    A lot of people think that there is only one KBB value. When you appraise your car via KBB, there are three key values; trade in, private party, and Dealership.

    For instance, I just re-appraised my car (hadn't done so in a week), and the numbers are as follows:

    Trade-in: $11,800
    Private-Party: $13,525
    Retail: $15,375

    So if trade in value is $11,800, that doesn't mean the dealer will low ball you and then try to sell for $11,800. It means that they will try to get you at or below the trade-in value, then sell it at the retail value.

    So let's go back to my earlier example with these revised numbers. I can trade it in at $11,800, or sell it privately at $13,525. Due to sales tax laws, at $11,800, my effective trade in becomes $12,814.80. So, I could sell it privately for about $700 more, but deal with the hassles that come with it, or accept the trade in. Of course, you could argue that the dealer would try to offer me below KBB value for the trade-in (and you're right, they would). However, the potential buyer would do the same.

    So a trade-in isn't always a steal, provided that you do it right. I have my car listed privately, and I can handle buying my car without the trade-in. So, if the dealer doesn't offer what I want, I keep the car and sell it privately.
  24. Outlaw71

    Outlaw71 Well-Known Member

    Well don't get me wrong, I'm not saying anyone who trades their car in is an idiot. All I'm saying is it's something I have only done once, and I regretted it later when someone asked me, "what did you do with your Accord"? And I said to them, "I traded it in on the Jeep". To which they replied, "how much did they give you"? And I told them, "$2500". And then they told me, "oh I wish you would have told me your were thinking about getting rid of it. I would have given you at least $4000 for it if I had known".

    That was the only time I ever traded a vehicle in on one I was getting. You do make some good points of pitfalls to selling privately btw. I suppose I can chalk never having fallen into any of them as a stroke of luck. But I think I'll stick to selling privately instead of trading in.

    I just feel it's treated me better doing it that way personally.
  25. Davdi

    Davdi Well-Known Member Contributor

    A few years ago I was in a dealers looking to buy a particular car which I'd specced. the salesman completely ignored what I wanted saying "This is the car I'm going to sell you".

    Needless to say, I walked

    Car salesmen, don't ya just love 'em?

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