Have you ever wished you could just get a car salesman to give you an honest, straightforward answer?
Well, here’s your chance.
For those of you who don’t remember, before we moved to Oregon The Bean made his (our?) living selling cars. He’d been doing it for over 10 years, and I mean, he really sold cars. I think his record still holds at his old dealership for the “most units moved” in a month (73 cars? 76? he can’t quite remember the exact number anymore). It wasn’t like he worked at a small dealership, either. His dealership was second in sales (for the brand of car they sold) for the entire United States
In other words, The Bean can really sell cars.
Heck, the guy can sell pretty much anything. Don’t believe me? Allow me to illustrate:
A few weeks into our dating I realized that our relationship wasn’t really going anywhere, and it didn’t make sense to prolong the inevitable. After my shift as a cocktail waitress ended I walked over to his house to break up with him…..
….and ended up cooking him dinner, giving him a back massage, and staying the night.
What’s worse, I didn’t even realize what had happened until the next morning, when my sister texted me, “So, how’d the breakup go?”
That’s how good of a salesman he is.
So, here’s the deal. If you have ever wanted to ask a car salesman a question and get a straight answer….. leave a comment. I’ll ask The Bean, and you’ll get the straight answer in the next “Ask A Car Salesman” post.
Also, I type at about 100 wpm, so I am doing my best to take down The Bean’s answers verbatim and only editing them to make them easier to read on paper. One of the things I’ve always enjoyed when listening to him talk about the car industry was the weird vocabulary/vernacular. Cars are units, people who have made the decision to buy are “under the ether”, all salesman use a foursquare, you avoid mooches and roaches and hope for a lay-down to walk through the door….
It’s kind of fascinating.
Anyways, if you ask, he’ll answer. We’re deep enough into his career as an accountant that I don’t think we’ll ever have to fall back on him selling cars, so there’s no harm in straightforward honesty about some of the stuff car dealerships really do.
So… ask away!
In the meantime, I proposed this idea on Facebook a couple of weeks ago, so I thought I’d start off with some of the questions people left on the post.
How long do I REALLY have to return the car with no penalties? I believe it’s 3 business days?
Zero days. The three-day thing is a myth. The federal law for cooling off periods does not apply to auto purchases. Although….I remember in California, before I left the business, they came out with this optional thing you could buy if you wanted. It was a cancellation contract where you could give the car back. The price of it was based on the selling price of the car, and it was only available on used cars under $40,000.
It didn’t really matter, because nobody ever bought the contract because it was so expensive. On a $20,000 used car it was around $500 bucks, and if you didn’t bring the car back within 3 days, it was just money you lost. What was the point? You can rent a car for three days cheaper than that.
There might be a state somewhere that has a legal cooling off period for cars, but not for new cars. If you get in a new car, and you drive it over the curb onto the street, you own it. It’s yours. Once it leaves the dealership, even if it only has .25 of a mile on it, it’s considered a used car and can’t be sold again as a new car.
Moral of the story…if you sign on it and drive it over the curb…you OWN it.
Why does buying a car take so long?
It’s supposed to wear a buyer down. The more tired you get, the more desire you’ll have to “just get out of there.” There comes a point in the transaction where a buyer’s mentally committed to buying the car, and they’re gonna buy it no matter what. By wearing them down, the buyer’s more likely to just say “Yeah, that’s fine, that’s fine, that’s fine,” and be willing to just sign on whatever so they can get out of the dealership.
What’s that term again? That term for people who you can totally rip off at that point if you wanted to?
Becky, I didn’t rip people off.
I know, I know. I’m just trying to remember the term you mentioned for people who you could rip off at that point, if you wanted to.
I really hate the term rip-off, you know—
A lay-down! That’s right. I was just trying to remember. Oh, RELAX, Bean. I was just trying to remember the term. Anyways, once someone’s committed to buying, is that when the salesman tries to sell them lots of stuff? (<— Would you like to buy my new book? It’s called: Becky Bean: How To Piss off An Interview Subject And Make Them All Defensive.)
Most car salesmen aren’t trying to sneak something in – they’re trying to pay the bills the same as everyone else. Most of us are pretty honest people. Think about it – it’s the same type of transaction you get when you go to some high-end clothing store like Nordstrom’s. When you buy a sweater and the salesperson says “You look great in that”, you’re still getting sold something. When the person at Nordstrom’s says, “You look great in that shirt, and it matches this tie I have over here perfectly,” they’re trying to upsell you something, the same as a car salesman. Sure, once a person’s “under the ether” and they’re mentally committed to buying the car, that’s when you try to get them to buy upsells and accessories, but it’s not like that stuff is worthless. All that stuff adds value to the right type of buyer.
For example, somebody who keeps a car a long time and isn’t that good at maintaining it***, they’d actually benefit from an extended warranty. Someone who leases or sells their car every three or four years, it wouldn’t help.
Fancy wheels might be expensive, but to the right person there is value in that. They might like how flashy they look in it, whereas a soccer mom in a minivan wouldn’t be interested in flashy wheels.
At the end of the day the transactions gotta make sense to everyone, right? The dealer’s gotta make money, the salesman’s gotta make money, the customer’s gotta feel like they got a good deal and everyone gets what they want.
*** YES, BEAN, I NOTICED THAT POINTED STARE YOU GAVE ME WHEN YOU SAID THAT, YOU BIG POO-POO HEAD.
Can you explain the price terms? (<— Okay, nobody actually asked this. This was me asking, because I’m financially dyslexic and can never keep money-terms straight in my head.)
The invoice is technically what the dealer bought the car from the manufacturer for.
The MSRP is the Manufacturer Suggested Retail Price. It’s what they’re listing the car at – the sticker, not-on-sale price. You don’t usually sell a car at MSRP, because for some reason nobody thinks cars are worth what the sticker price is. The exception to that would be exotic sports cars, or if it’s a high-demand, low-production car. For instance, when the Turbo Miata was new there wasn’t anything exotic about it, but a lot of people wanted it so they sold for MSRP. If you went into the dealer and asked for a grand off, well, there were ten other people willing to pay full price .
There are a lot of cars where the supply and demand dictate it sells for more than MSRP. It’s been several years so I don’t know if it’s still true, but if you went in to buy a Porsche 911 Turbo you’d be lucky to have the privilege of paying only 10 grand over MSRP for that kind of car. When gas was over 5 bucks a gallon, if you wanted to buy a Toyota Prius or a Honda Civic hybrid you had to pay over MSRP. People fought over cars like that – as in, they actually almost physically fought each other to buy them.
What about the MSRP on Used Cars?
Oh, used cars are fun. Used cars don’t have MSRP. An MSRP is only for new cars – MSRP is “MANUFACTURER” Suggested Retail Price. Basically, dealers go to Kelly Blue Book to come up with what the price the car is worth. The only reason they use Kelly Blue Book is because the banks used Kelly Blue Book to determine how much money they’re willing to loan on the car. So, if Kelly Blue Book stated the car was worth 15 grand, then the banks would say they wouldn’t be willing to give a loan over 110% of what the car was worth. So, the dealer would price it at 16 grand.
I always hated Kelly Blue Book because certain types of people would come in waving a piece of paper around and saying things like, “Well, Kelly Blue Book says my car is worth X amount!” I always used to tell them, “Well, why don’t you go have Kelly Blue Book buy your car?” Interestingly enough, Kelly Blue Book doesn’t actually buy cars…
Interesting rant/point of view I inspired out of The Bean when I was arguing with him about how a lot of people do get ripped off by car dealerships…because, I’m a super professional interviewer and like to argue with the interview subject:
Sure, there were people who might have rolled back odometers and stuff like that in the past, but that was back when cars had tailfins and Bugsy Siegel rolled around in them. The thing is, that stuff mostly went away when tailfins went away on cars. You can’t do that anymore. Still, there’s this public perception that car dealership’s aren’t there to make money, and that the buyer shouldn’t have to pay a penny over what the dealership bought it for.
The thing is, you wouldn’t do that anywhere else. I mean, you wouldn’t go to Best Buy to buy a tv and ask the guy what his invoice is, and tell him you’re not gonna pay a penny over that. It doesn’t say “Red Cross” on the side of the building – it’s not a charity organization. Dealerships have to pay the bill to keep their lights on, too. That’s part of the reason some dealerships have gotten more aggressive in their tactics. If consumers push and push and push, then dealerships are gonna push back.
What was the average you would make on an average car commission?
Are you talking about my commission or the dealership’s gross profit? As far as commission, depending on the pay plan I was on, it was 25-30% of the gross profit for the deal. A beginner car salesman would get around 20%.
The least amount I ever made on a deal was $100 – that was the amount you got for moving a unit. Some guys only got a $50 flat for moving the unit – it all depended how well you negotiated your pay plan.
What’s the most you ever made on a deal?
I think it was around $8500 bucks. That deal was on the last mineral grey Acura NSX that was available for sale in the US, when the car went out of production. I sold it through a contact of mine to a very well known actor. He was actually a total prick, but he paid all the money.