The inside scoop of buying a NEW car

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Great thread from an insider. Thanks!

Getting up and walking out over $20 works. They wanted $20 more than we were willing to pay on the car. We walked out, the sales mgr called us 10 minutes later and said he could do it. He made money, we got what we wanted at the price we wanted win win.
Good job!
It is amazing how $20 can make or break a deal.
The salesman/manager has to really believe you will walk out before they get stone cold serious.
If you do walk, 99% of the time you won't get to your car before the salesman runs out to get you.
If you are thousands apart (hard to believe unless a trade is involved) then he won't chase you.
If you've been a sarcastic and caustic jerk, they will gladly let you leave. They don't need you that bad.
If you are close and you've been up front and professional, they will try to make it work.
If I was the salesman and you were head butting over $20, I would have reached into my wallet and handed you $20. I know I would do it because I've done it more than once.
Congrats on making a deal that works for you.
It does not matter what anyone else thinks or says.
I have seen those guys who always have to one up everybody about everything and they always say you got ripped.
The bottom line is if you are happy with your new car and think the price was fair, who gives a #$%$ what anybody else thinks.
As we now know, unless the factory has rebates available to all, we all pay pretty much the same for pretty much the same car.
There is not a lot of room to get screwed unless you buy that paint protection for $1500!
 
I am looking to buy an electric vehicle within the next 24 months. Can you talk to me about vehicles that are sold in order to meet zero emission compliance numbers for certain states? Must they be sold to residents of those states? Is that a dealer decision or a corporate decision? Is there a benefit to the dealer to have a compliance car still sitting on the lot vs. selling it for no compliance credit?
Sorry, can't help you here.
I have zero experience in the CA emission laws.
I have zero experience with the Tesla and more recent electric cars.
I did drive a 2015 Prius Hybrid for 3 years, that count?
(great, amazing car)
It was a company car.
My instincts tell me that you already know all of that from my discussion here.
If you wanted to fluster me, didn't work but nice try.
I have no problem admitting when I don't know something.
Even though I am a car guy (retired) I never did nor ever will BS people.
I save that for the real pros of BS.
You can find one at every car dealer.
 
Sorry, can't help you here.
I have zero experience in the CA emission laws.
I have zero experience with the Tesla and more recent electric cars.
I did drive a 2015 Prius Hybrid for 3 years, that count?
(great, amazing car)
It was a company car.
My instincts tell me that you already know all of that from my discussion here.
If you wanted to fluster me, didn't work but nice try.
I have no problem admitting when I don't know something.
Even though I am a car guy (retired) I never did nor ever will BS people.
I save that for the real pros of BS.
You can find one at every car dealer.

Thanks. Not trying to fluster you. I’m truly ignorant about this aspect of how things work and I had hoped that maybe you ordered one for a customer and knew how to do it.

Tesla is its own thing, but I am interested in the Kia eNiro or maybe a VW eGolf but I don’t know if they’ll ship one from dealer stock in MD to NC, nor if I can buy one if I go to MD.

Again, thanks for taking the time to reply.
 
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First, Thank you for making this thread. I've learned alot. The dealers that add these add-ons already, do burn me up.

Example - $400 nitrogen filled tires.

This broke a deal on a new Camry at Toyota of Apex. I say no, I'm not paying for it or the tint (best friend owns a high end tint shop and knows who and what tint is on those cars....crap). Salesman says give me 10 minutes, I've already been there 2.5 hours. I politely say, 5 minutes, I've got errands to run.

5 minutes is up, gave another 2 and I start to walk. I'm at the front door and I hear my named called. Salesman goes and gets the manager and gives the same spill about nitrogen filled tires. I use to work at Honda as a mechanic in college. I mention how is $400 nitrogen filled tires going to do a darn thing, when the air we breath contains 75-78%? Thank you but no thanks

My number was what another dealer gave me but on paper kept moving money around (OTD price, trade, fiance amount, etc) so I walked from them. Dealership I then went to had $900 in add ons. True car price 24,000 OTDw/ everything (tags, tax, doc, etc) and Toyota had another incentive for $750. I was trying to haggle down to 23,000 OTD. Manager said no and so I politely excused my self and left. Few days later they called me asking what it would take for me to sign the papers.
 
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If they don't give me my license or keys back imediately, we are going to have a problem. Number 1, I'm not test driving your car until you give me my license back. Number 2, I'm not talking any deals until you give me my keys back. If you don't give either of them back it won't be long before I'm on the phone threatening to call 911 for a theft. I hate car dealers. Half the practices they employ should be outlawed. And, there is no way a car deal should take three or four hours. They know what they have in the car and what they can sell it for. Skip the BS and get to the bottom line. My next purchase is going to be through Costco.
I stopped by Scott Clark Honda to look at a new Accord. Their first offer was $4k OVER sticker! I walked right then and they have been calling me every week since. Sorry Scott but I'm not playing that game.
 
Let's Talk DOC Fee!

Yeah, every dealer charges a DOC fee.
What is a DOC fee?
Well, in theory, it is a fee they charge to prepare all of the documents (DOCs) for proper disbursement.
Sales tax to the state. Tag tax to a different state office.
Contracts and original signed paperwork (like the credit app, etc) to the lender.
Proper liens recorded (if financed).
etc., etc., etc.
All of the normal stuff required to process the deal properly.
The office workers and secretaries process this stuff every day, it is what their job is.
IMO, this is part of the wages overhead. Do we have a PORTER Fee? An ACCOUNTANT fee?
Every dealer has to do it. Smaller dealers have the finance guy do it.
Some dealers have the owner's wife or daughter do it.
It's just part of selling cars. Period.
So, what is a DOC fee?
Pure profit. Simple. A DOC fee is the dealer's way of saying I want $XXX to do your paperwork.
As a profit item, it is taxed by the state.
By law, it is regulated by many of the states. Many states have a cap on how much a dealer can charge.
Other states have no restrictions.
When people complain about the charge a savvy salesman/manager says that the DOC fee is regulated by the state (true) and that everybody pays it (true). However, some dealers charge a lot more than others.
Some years back, IL had a cap of $99 on the DOC fee as a law. It was later raised to $199. I don't know what it is today, maybe $299? I've seen dealers in NC charge $695 or more.

I've seen a lot of dealers (especially the high volume, low profit dealers, charge $695 or $895 as a DOC fee.
So, Mega Dodge sells 400 cars a month and is known to cut the best deals but charges a DOC fee of $795.
$800x400 is $320,000 in pure profit. Per month! Yeah, Mega Dodge sells low but they are not going broke!
SmallTown Dodge cannot match the retail of Mega's cars so he earns his business with superior customer
service and a pleasant buying experience along with a 5 Star service department. He gets a lot of Mega's
service work because he treats his customers better. Also, he only charges $299 for his DOC fee because
he is not a whore. He has been there for 30 years selling his 100 cars a month because his sales area is more rural.

So, can you negotiate the DOC fee? Sure, you can try. You can hold your breath and turn blue. You can threaten to walk but they tell you that everybody pays the same DOC fee and it's part of buying a car. Asking to waive the DOC fee to earn your business is like asking the owner to come mow your lawn.... ain't gonna happen.
Yeah, if you are at full MSRP on your purchase a manager may "knock $300 of the DOC fee off the sale price to make a deal, but the paperwork will show the full DOC fee that everybody pays. The selling price may be reduced but if there was room there to absorb some of the DOC fee, there was room there to make a better deal.

Bottom line: The DOC fee is pure profit. Processing the paperwork (documents) is part of being a dealer as much as paying for heat.
It is a way to pick up additional profit. It's like charging every customer a HEAT fee, an A/C fee, a SECURITY SYSTEM fee, etc.
Same principle.

Now, the salesman does not get paid on the DOC fee.
Many dealers do not pay the managers on the DOC fee even though it is profit (no one sold it, it is just there).
GMs do get paid on the DOC fee as part of the profit because, well, it is nothing but profit.

So, all you guys who ask where the profit is? Well, the DOC fee is a large part of it.
The manager says he can't do that price because he'd lose $100. You can counter by saying that his $695 DOC fee more than makes up for it.

Some of the local small dealer used car lots/gas stations that sell cars for cash don't try to charge a DOC fee or may ask $99 or so. They know that
no one will pay a $695 DOC fee on a $2500 car. They would chase away business if they tried to get that. Funny thing is they also have to do the same paperwork the big dealers do.

So, when your salesman or manager is crying because he ain't making no money, kindly tell him that the $599 DOC fee IS profit.
When he tries to justify it with the BS he's told to say you can tell him to call it anything he wants, it's pure profit.... because it is.
So, you will not be able to get the DOC fee waived but when it comes down to pennies you can remind him that he has the DOC fee sitting there and it is pure profit.
 
If they don't give me my license or keys back imediately, we are going to have a problem. Number 1, I'm not test driving your car until you give me my license back. Number 2, I'm not talking any deals until you give me my keys back. If you don't give either of them back it won't be long before I'm on the phone threatening to call 911 for a theft. I hate car dealers. Half the practices they employ should be outlawed. And, there is no way a car deal should take three or four hours. They know what they have in the car and what they can sell it for. Skip the BS and get to the bottom line. My next purchase is going to be through Costco.
I stopped by Scott Clark Honda to look at a new Accord. Their first offer was $4k OVER sticker! I walked right then and they have been calling me every week since. Sorry Scott but I'm not playing that game.
I feel the same way.
I won't test drive the car without my license in my pocket. Give it back, now.
I won't negotiate anything until I have my trade keys back.
They aren't done appraising it?
Well, how can we talk price if we don't know what my trade is worth?
I'll wait. I'll have a cigarette. If it takes too long I'll walk up to the manager and demand my keys right there.
If he falters, pull out your phone and ask him if he wants the sheriff or local police to come?
At no time do you need to be a total jerk.
I can be (what I call myself) professionally prickly.
I've showed it a few times in this thread.
It is a way of communicating with someone that lets them you you are not messing around.
Once you have your license and keys, you can leave whenever you feel like something is not right.
If they have your license and/or keys, you are stuck there. They deliberately keep your stuff to prevent you from leaving. It is part of the process. It's a way they gain control of the deal.
You take that away from them if you get your stuff back before you start the process.
You now have control of the deal.
It's really that simple.
 
I’m slowly making my way thru this thread and enjoying it immensely. Thanks for sharing your experience.

I’d like to share something from a bygone era that might make you chuckle. As I mentioned in the repair thread, my BIL (RIP Michael) built and owned the single highest volume Mercedes dealership in the country. He eventually sold it to one of those mega chains when he detected (thanks to being on the factory’s advisory council) that an upcoming increase in production combined with a reduction in the gap between MSRP and true “cost” meant the days of big profits were likely over. He sold out at the absolute top. Anyway, back to the story...

I asked whether he’d be willing to give me a tour of the dealership and he agreed. I found it quite interesting to go behind the curtain. We ended in the showroom and I asked (probably with the wrong tone of voice) how it was possible that he was not offering to sell and install cell phones (this, back in the day when that meant a big box in your trunk and an extra antenna). Aren’t all your customers targets for such an add on sale?

He explained, “Jeppo, I’m able to sell every single vehicle they send me and all of them at full sticker price. We NEVER give one penny of discount. My sales are only limited by my unit allocation. When a rich doctor or athlete comes in and pays $50 or 60k (remember the time period) for a new Mercedes and gets no discount, if we have a nice display of cell phone options, he’s gonna ask us to throw it in, in lieu of any discount.” Michael didn’t become #1 by being stupid.

I always believed another secret to his success was how he faced the competitors in his market (Greater Los Angeles which is certainly a fiercely competitive region). All the top competing MB dealerships were owned by guys that owned numerous other brand dealerships. The number two guy (dead center of downtown LA) owned countless other dealerships representing who knows how many brands. Those other guys had to spend their time dealing with the unfathomable complexity of multiple factories, multiple locations, multiple advertisements, etc. On the other hand, Michael woke up in the morning and went to bed in the evening with only one thing on his mind all day...how to kill those other guys (well, he may have also spent a few moments considering how to spend the fortune he was making).
 
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I feel the same way.
I won't test drive the car without my license in my pocket. Give it back, now.
I won't negotiate anything until I have my trade keys back.
They aren't done appraising it?
Well, how can we talk price if we don't know what my trade is worth?
I'll wait. I'll have a cigarette. If it takes too long I'll walk up to the manager and demand my keys right there.
If he falters, pull out your phone and ask him if he wants the sheriff or local police to come?
At no time do you need to be a total jerk.
I can be (what I call myself) professionally prickly.
I've showed it a few times in this thread.
It is a way of communicating with someone that lets them you you are not messing around.
Once you have your license and keys, you can leave whenever you feel like something is not right.
If they have your license and/or keys, you are stuck there. They deliberately keep your stuff to prevent you from leaving. It is part of the process. It's a way they gain control of the deal.
You take that away from them if you get your stuff back before you start the process.
You now have control of the deal.
It's really that simple.

Yep, just another sleazy tactic they use that should be illegal.
 
We still have Pay Plans and Leasing to discuss.
Pay plans just so you understand how it works.
Leasing because, well, a lot of people lease cars!

I'll do pay plans first because it should take less time.
It has some depth to it and is is pretty cut and dried.

Pay plans for selling a new car is a lot less involved than a used car pay plan.
I will discuss the new car pay plan and will touch on the used car pay plan now and go deeper in the Used Car thread.

New Car Salesman Pay Plans:
Most of us have a regular schedule of a 40 hour work week at $X an hour. Many are offered overtime at 1.5x the hourly rate.
Many are paid straight time for every hour worked with no cap on the hours.
Many have a set salary of $XXX a week no matter how many hours worked.
Bottom line, you generally know that if you work your 40 hours, you will get a paycheck of $XXX dollars on pay day.
Like clockwork. On pay day, you get your money. As regular as your daily constitutional. (Yes, some just aren't regular, same as pay checks).
So, you work your 8-5, 7-4, 9-6, 3-11, 12-8 schedule and get paid. That is the deal you both made when hired. Most places are good about this.
As a responsible person, you do your best to hold up your end too. A good business deal.

First, a New Car Salesman's hours (Most dealers I've worked at. Many have a different schedule but don't vary much).
Let's assume a normal dealer's hours in a week.
Mon-Fri, 9-9. Sat 9-6. Closed Sunday. (Many dealers are open Sundays so this may not apply)
A typical new car salesman schedule:
Mon: 9-9
Tues: 9-5
Wed: Off
Thur: 3-9
Fri: 9-9
Sat: 9-6
Total SCHEDULED hours: 47
Now, a good dealer will schedule your day off around your early out day (5pm) and your late start day (3pm) so you are off nearly 48 straight hours. (46, actually). This is supposed to make up for working the 2 9-9 days. (it does help).
A 9-9 work day is called a "bustout" because it is a rough day that is also a long day especially during slow times. Many dealers allow a "relaxed" lunch hour so you can do some errands, clear your head, grab some sit down food instead of a drive thru, etc.
If you are a good salesman you can usually stretch your "lunch break" for 2 hours. If you are a newbie, pack a lunch.
The point is, they work a brutal schedule.
Now think about it. Most sales are in the evening, after work, for most people. Every salesman better be back from (wherever) by 5:00 to serve the buyer. If an average deal, front-to-back takes a minimum of 4 hours the if/when a salesman gets a customer at 6:00 and they end up buying, he goes home at about 10:00. I know a lot of veteran salesmen and lazy salesmen who do not take a walk in after 5:00. If it is their early out day, they hide after 2:00 or so because they want to leave at 5:00 and have a real dinner with their bride.

75% of New Car salesman are the newbies/trainees and first year rookies. Nobody is even considered to be able to sell used cars until they have at least 1 year and usually 2 years in new car sales to learn how to negotiate, qualify the buyer and the learn the process like the back of their hand.

The other 25% are the old veterans who do not take walk ins, sell by appointment only and are usually given deals from the managers of friends, family and people who called them during the week asking for a pro who can get them in and out quickly (see above). The vets know how to get it done and get it done right and get it done fast. They are just smooth. Deals given to them from management are called "bones". It's like giving a dog a bone. It is usually a for sure sale and the deal is usually worked before the customer gets there (friend, family, etc) so all the salesman does is do the paperwork and smile.

So, this lets you know that the guy selling you the new car is usually new, on probation or still green. A new salesman has to take computer courses about the product line before he can sell on his own. He has to shadow a more experienced salesman until he passes all his courses. If the brand has 12 different
models, there are 12 tests, etc. You will not get paid any factory money (more later) until you complete your courses. You get paid minimum wage for that state (@40 hours only) until you are certified (pass all the tests). Ambitious newbies can do 2-3 tests a day (if he hides behind a computer instead of shadowing somebody). If it's a slow time (see above) he can knock his tests out in a week. If its a busy time, 2-3 weeks works but he gets a lot of hands on experience.

The training courses teach the salesmen about the product they are selling, not about the process. If he's at a Honda dealer, he'll learn about that specific
model's competition. Let's talk Civic. The Toyota Corolla is it's biggest competitor so the course teaches how the Civic beats the Corolla. The salesman is taught which car has better HP, more leg room, more head room, more hip room, more cargo space, more cup holders, better transmission, etc.
A good salesman retains this and then uses it to show you why his car is better (and forgets which areas are worse). It is comprehensive and if he's a good student of the position, he retains it and actually uses it. This gives a new salesman the tools needed to be a good salesperson for the product he is expected to sell. He is taught to build value in whatever car you want to see. His job is to know why your choice there is the best option. If he does not sell you a car, he does not make any money!

So, a new salesman makes minimum wage (for 40 hours) for his training period. The training period is usually 90 days (or 60, or 30, depending in how
fast of a learner he is and how personable he is. So, for his training period he is guaranteed a pay check every week, just like if he worked at McDonalds!
A good dealer will have a manager sit with him, when it's slow, for 1 on 1 training in the art of working the process. They will do role playing. They will learn how to take control of the deal. They will learn how to confuse the buyer when there is a trade in or if the car is loaded with aftermarket "junk".
Good stores make sure a newbie is schooled in all aspects of working the process. A good salesman is taught how to overcome objections by the buyer (a HUGE deal in selling), etc. I keep saying "a good dealer" because a lot of dealers just don't do this. They sit down with him for an hour and tell him if he doesn't say "exactly" what he is told to say or to do "exactly" what he is told to do he will be let go. (he will be let go if he takes shortcuts in the process). So, the good dealer actually teaches, the rest just throw him out there to learn on the fly.
BTW, turnover in New Car Sales is huge. I'm guessing but I'd say that 20% may actually see 1 year in New Car Sales.

Ok, how is this related to the pay plan? Well, it is. You see minimum wage for 90 days and shadow a pro. You are then set free to make your millions.
Do you sink or swim? Well, depends on if they hired you in March or September. Remember, June and July and early August is just terrible in the retail auto world. It is just too hot to walk the lot and deal with hot, sweaty buyers. So, if your 90 days ends on June 1, you will struggle to survive until September (if you last that long). Smart dealers hire in the hot summer so the newbie will be trained for the fall and year end push. Others hire when they lose a guy or 2 and don't think about the new guy making a living. They don't think about it.

Why is this important? Well, every new car dealer answers to the factory about many things with customer satisfaction being #1 to the manufacturers.
About a month after you buy a NEW car, the factory sends you a detailed survey (usually called a Customer Satisfaction Survey). Each brand has their
own name but it is the same thing. They want to know, in detail, how happy you were with the buying process. Seriously, they want to know!
From my experience and viewpoint and from listening to guys like you, the internet and friends and family, no one enjoyed the process. Most actually hate it! So, when the time comes to express your views, you either ignore the survey or give the process a 4 or 5 star rating! Unbelievable!
How is this possible?
I have seen, first hand, the salesmen manipulate these surveys. When every car is sold to you or someone else, you should be told to expect the
survey in about a month. In the finance office, the last thing the Finance Guy says is to expect the survey and to give us 5 stars!
How does everyone fall for this when they are truly unhappy with the process?? Well, the are bribed. Pure and simple.

...(con't)
 
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When it is time to go, the salesman sends them on their way. Usually the salesman becomes a "friend" to the buyer. The manager becomes the bad guy while the salesman then becomes the good guy (good cop/bad cop). The salesman schmoozes the buyer, asks for referrals and apologizes for the process and all the time it took. By this time, if you are truly leaving, you have relaxed and chilled out. You are now happy you get to leave in your new car. You may actually begin to like the salesman! After all, he is just doing his job, as instructed by management. Management is evil, the salesman is the good guy!

The salesman tells you that the survey is VERY IMPORTANT to him (it is) and if you give him a bad rating he could lose his job (he really could).
So, if the salesman was ok, you tell him he'll get 5 stars for everything. To ensure this happens, the salesman tells the new owner that when the survey comes in the mail to bring it in, unfilled, to go over it together. If they do that, they will get a free oil change, a $50 gift card or something of value for their time and consideration. (This is usually sanctioned by the dealer who usually pays for these gifts). Now, this does not sit well with the factory but who will tell them? Not the dealer, not you so who? Well, nobody says anything. The salesman and dealer get a perfect satisfaction score. Also, usually a month later, the buyer cools off, enjoys his car and forgets all the aggravation he went thru and just takes care of the salesman.

Again, these surveys are very important to the factory, to the dealer and especially the salesman. Most factories assign a satisfaction rating that totals the total scores for the month. For ease, let's call it a CSI for Customer Satisfaction Index. Some call it that, others call is something similar.
It is a number that the factory assigns to a dealer for a cumulative score of returned, completed surveys. Many dealers have a requirement that the salesman contacts the buyer 3 days after the sale, a week after the sale and a month after the sale (to ask if the survey arrived at the 1 month mark).
The 3 day and week calls are to see if there are any issues which need to be addressed. Anything. The salesman and dealer truly do want to fix something that needs attention to get a good survey (sorry, prices are not considered a problem). The survey asks if you were contacted at these intervals. It's an actual question. The survey is pretty comprehensive and really wants your truthful opinion. Why? well, the dealer represents the factory's name. If the dealer mistreats the buyer, it paints the Mfg in a bad light. "Screw Ford! They hire a bunch on sneaky, slimy thugs!" That seems to sound like a lot of what I see here. Well, Ford isn't the issue to you, the dealer and his crew are the problem. If you see it as a Ford issue, Ford suffers. Ford wants to make sure it is not Ford, but the dealers. A bad car is on Ford. A bad buying experience is on the dealer, not Ford.

So, the factory truly wants to weed out the bad dealers who give them a bad name. If you lie on your survey for a bribe then you are helping a bad dealer stay open. If you ignore the survey, toss it in the junk mail bin but were pissed when you left, you are helping a bad dealer stay open, screwing people every day. If you liked the salesman but hated everything else, the survey is catered to each part of the process. You can give your salesman a great rating and the finance office a 1 star rating.

What does all of this matter?
Well, believe it or not, the factory has some control over the dealer and how they operate. If a dealer continually gets a 90% or better rating, they are left alone to continue doing their thing without penalty.
If they are continually in the 80-89% range, they get some "coaching" from the factory and warnings to get it up to 90%.
They start to feel the "penalties" from the factory. The first item is called ALLOCATIONS". The factory starts to mess with the dealer's ALLOCATIONS.
What is an Allocation? Well, it has to do with the inventory the dealer can order from the factory. When there is a hot car that everybody wants and
only a handful are produced (special badges, Hellcat's, SS Camaros, Limited Production Whatevers, etc (the latest hot want is the mid-engine corvette), The limited Mustangs or GT500s, that special package F250, etc. There are a lot of limited production units out there. Every dealer can sell every one they can get but the factory limits them to what they can get. If they produce 2,000 Special Package F250s that everybody wants and there are 1,000 Ford dealers, does everybody get 2? That would make sense, right? Well, if Dealer A sells 1,000 F-Series trucks a month and Dealer B sells 10 F-Series trucks a month, should the bigger seller get more than the little guy? Well, fairness says no but business sense says yes. How do they decide who gets what?
Well, Allocations are largely determined by volume AND the CSI rating of a dealer. If Dealer B has a continuous 98% CSI rating and Dealer A has an 82% rating, dealer B may just get 2 units while dealer A gets 1. Backwards? Well, they reward those who take the best care of their customers. The factory doesn't care who sells them because someone will so they use the CSI as a guide in who gets the better units, the special units and the hottest sellers out there. If a dealer continues to get <80% CSI ratings, he could very well lose his franchise. The dealers who are new to town today and gone 2 years later? It's a very good chance that they has bad CSI and the factory pulled their ticket. Yes, they will. The CSI means A LOT to EVERY dealer.

Ok, got it. CSI matters. The survey I get is my chance to share my experience. Use it!

Ok, I thought we were on pay plans? We are? How?

...(con't)
 
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Well, for that new car salesman, the CSI rating on HIS abilities ties to his pay. Each dealer has a different satisfaction number but if a salesman cannot average 88% or better, he is not long for that store (maybe franchise because he carries his score from Ford store to Ford store). If he gets a 0%
rating 2 or 3 times then his average will cost him his job and another Ford store won't want him to ruin their CSI. He may need to go to Chevy to work!

Actual Pay Plan information:
The table has been set.
A Newbie New Car Salesman earns minimum wage x 40 for his training period (30-90 days). If he makes it past this training without getting fired, he gets to earn commission! Yes! That's why he is there! To get rich! Retire young! Have a yacht! Yes!
Well, not so fast. Unless a New Car salesman has been there for years and has a consistent following and gets a lot of bones, a new car salesman usually
does not last another 90 days unless he has another source of income (wife, lives at home, sells drugs, etc). Why? His pay plan just plain sucks.
He'll be lucky to make $20,000 per year. Why? Well, here's why.
We already know that there is no markup on new cars. If a salesman gets 25% of nothing, what does he get? Nothing.
Well, not nothing. A majority of the dealers pay, what is called, a mini. $50. Some good dealers pay a $75 or $100 mini.
So, he spends 6 hours with you on a Saturday and earns a whopping $50. Yippee. But wait, is there more?

Well, he can earn up to 35% on any aftermarket sale. Those $199 pinstripes may pay him $35. That $599 paint protection may pay him $100. The remote starter? Maybe $50. So, if he sells you the stuff that is already on the car and you don't make them reduce it to nothing then he could earn an additional $50 or $100. That's better. But wait, if these are already on the car, many dealers will just consider this front end profit, subject to the 25% pay plan so his commission is less. Slimy but done all the time. So, the $100 over invoice for the car has another $200 added for the stuff you didn't want (they reduced it to dealer cost) and it's $300 front end profit. 25% is $75. Well, better. But wait! Not so fast.
90% of the dealers have what is called a "pack". A "pack" is charged to every car sold before commission is paid. WHAT? How is this possible?
Well, it is justified the same way an owner justifies not paying commission on the DOC fee. The pack is charged to cover for incidental expenses like advertising, that gorilla out front, the lunch every dealer provides on Saturdays (they will not let you leave for lunch so they provide it for free), etc. In the business we call hidden expenses a "bush". A pack is a bush, a reason to screw a commission, to save money to pay bills. Dealers have many ways to save paying commissions. Almost every dealer charges a pack on used cars, usually $2000 or more, before a commission is paid.
(Used car packs will be discussed in the used car thread). So, any pack is deducted before the commission is figured,
So, that deal (with the unwanted add-ons) had a front profit of $300 before pack (25%=$75). The dealer takes away his "pack" ($200) and the payable commission is now $100 (25%=$25). Well, since there is a $50 mini, the salesman gets the same $50.

Back to the pay plan. If a salesman sells 10 cars a month (an ok job and not unusual) he earns $500 in commission ($50x10). There may be 1 or 2 times a month when he actually sells a car at MSRP (remember the trade in scenario where no one asked for money off MSRP?), he could earn a nice commission. Let's say he sells a truck with a $3200 markup ($50k truck). He gets MSRP for some reason. His profit payable is $3200 minus the $200 pack for $3,000 payable. 25% of $3,000 is $750. In the business, that is called a "whack". The salesman
got a $750 commission for that deal. Let's assume the buyer wanted the side steps, bed liner. Bed rails and a remote starter. All told, he sold another $1500 of profit. In an aftermarket paid store, he gets $35% commission ($525). In a traditional pay store, he gets another $450 (25%). Either way he gets a commission in excess of $1200. Salesmen live and dies for that 1 commission each month where he
gets MSRP+. One deal a month like that usually makes his month and pays his bills. Have a slow month? (Jun-Aug) and he gets less than $1000
for the entire month.


Now, if he does sell true aftermarket parts (steps for a pickup, power roof, upgraded wheels, remote starter, etc) then he will earn the 35% since he sold them "after" the sale (aftersale or aftermarket products). So, he CAN make another $100 if he sells a nice upgrade package for the truck you bought. Maybe. Some dealers just call it front end profit to pay the 25% (instead of 35%) and is subject to the $200 pack. Lose/lose.
So, the dealers screw the salesman as much as the customer. Truly. Feel bad for that new car salesman. He's getting hosed too.

Other sources of income for that poor New Car Salesman:

Yes, a decent New Car Salesman is lucky to get 1 whack a month (commission of $300 or more), maybe 2. MSRP is hard to get today with the 'net.
So, he is lucky to earn $2000 a month ($24k a year). If he worked at McDonalds for minimum wage, he'd earn $16k or so for full time, maybe $24k as a crew chief. So, he works 48+ hours a week and earns what a crew chief at a fast food restaurant makes. Ok, it's a living but not a lucrative one! But, there are a few other ways to pick up some additional income.

Remember the huge blow-out factory sales? Year end, model year end, End of Spring, End of Summer, End of Fall, etc. Nationally advertised sales with the big rebates? Well, the factory does take care of the low paid New Car Salesman as well. Not a lot, but some.
The factory offers what is called "Spins". What is a spin? Well, a spin is a bonus paid for selling a specific model (not the fastest selling cars) but
many of the slower sellers, older models and units with heavy back inventory.
A salesman earns a Spin if he sells an eligible car. What happens is the factory (supposedly) spins a wheel-of-fortune type of machine. This "wheel" has various bonus values on it, payable to the salesman. Minimum spin is $50. So, a salesman who sells an eligible car gets a minimum $50 spin (basically doubles his commission). But, this wheel has other amounts. $75, $100, and even a $500 spin. Of course, there are mostly $50 spins but maybe 1 of 30 is $500 and 1 in 15 may be $100... well they do pay someone this money. So, if a salesman sells 5 cars that qualify, he earns an additional (minimum) $250 and possibly a lot more. It's a nice touch. It raises moral. It gets them up for this big sale because they can make some money. Ok, these occur maybe 4 times a year and sporadically, if they need to move a specific model due to over runs.

ONE CAVEAT! If the salseman's CSI (remember that?) is not at 88% or better, he does not get to spin. CSI is HUGE with the factory. 88% is considered just above poor.

Will he get rich? Nah, but it beats working a grill to some, others go back to the grill because it is too much work and brain damage for too little pay at a new car store.

...(con't)
 
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...(con't)


Another chance of earning money:
As touched on above, the dealer pays volume bonuses for sales.
a "usual" one is $500 for 12 sold units, $750 for 15 sold units and $1000 for 20 sold units.

20 sold units is the mark of the pro or a really good salesman. A salesman who continually sells 20 units a month likely makes in excess of $75,000 a year and can work at any dealer and pull in a salary (weekly guarantee in addition to his commissions). His CSI is
usually in the 95% plus range. He can call his own shots. He usually gets the "bones" from management. He is loving live.
I'd say 1 in 30 salesmen ever get to this stage and it takes years to get there. Also, they resist manageritis (the need to be a manager).
He usually has a condensed schedule because he schedules his appointments and all of his business is generated from within his old buyers/referrals/friends and the bones he gets. He probably averages 25 deals a month. He is the guy you want to buy from.

So, a newbie hits his first bonus of 12 cars/$500. Getting a check for $500 (less taxes, of course) in a totally separate check is a nice feeling. He can take the wife out to dinner, buy his kids a nice toy, etc. It just hooks that newbie further into the walls of hell.
That first $750 is also nice. Probably from a mega sale and he managed a whack and a good truck aftermarket deal. Life is good.

Those months the new car guy actually enjoys going to work and putting in his 12, 13 even 14 hour days. If he works 9-9 and has a late sale, he stays until the customer leaves. Usually 10 or 10:30pm. Long day! It happens a lot. Managers stay until the last buyer leaves, in case of a blow up, every day. So, managers work until (average) 10pm every day. Every. Day.

Ok, he gets his mini. He gets his spins. He gets his bonus. He gets to his $24k a year with all of this. Anything else?
Well, a lot of dealers pay "spiffs". What is a spiff? Well, a spiff is an incentive paid on a Saturday for doing something special.
It is typically paid, in cash, at the end of the day. (It is taxed on your check but you still get it that day).

A typical Saturday spiff is:
First sale of the day (fresh walk in, nobody worked during the week or coming back for delivery) $50
Management likes getting the ball rolling.
A hat trick (3 cars sold AND delivered (no coming back next week with the check. They have to drive away that day). $100
Certain marked cars (usually used) that have been around so long they are on payroll. $100-$500
(ever wonder why a salesman keeps pulling you to that car you have no interest in? I bet it has a $500 spiff on it!
A retired Demo - $100-$150
A new, last year model still there in June - $500
(A Demo is a new car driven by management until it hits 6,000 miles. It is then sold. Usually at invoice but you never know!)
Some times goofy spiffs like the first buyer with red hair, $50 or the first sale named Smith - $100, etc. Fun stuff.

SO, a New Car Salesman can make some extra cash, some fun cash and some nice pay checks. He usually struggles the other 9 months and barely pays his bills.
It is truly not for everybody PLUS you need to have a nice personality and thick skin to boot.
 
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Have you ever thought of teaching sales in general?
 
With all the car buying services available today like Costco, some credit unions, Carvana, and internet sales at the dealer why would anyone ever subject themselves to the run around that you get from the lot lizards and sales managers by buying in person. Hell even if you paid more for the car it beats putting up with their BS.
 
With all the car buying services available today like Costco, some credit unions, Carvana, and internet sales at the dealer why would anyone ever subject themselves to the run around that you get from the lot lizards and sales managers by buying in person. Hell even if you paid more for the car it beats putting up with their BS.
I said to my wife while we were at the dealer a month or so ago "if a dealer would just make a positive/happy work environment, these guys walking around here wouldn't look so gloomy and it would make the place more enjoyable...might even translate into an easier sale for them." But no--everyone is so over-pressured and ready to go to war with everyone that walks in the door. The only environment that permeates the air is cigarettes and cheap cologne.
 
Reading all this has been interesting. I've only ever bought one new car in my life. All the others I've bought used. The last few I've bought, I've done my research ahead of time. Dealers with good websites are more likely to get my business. I typically use a site like car gurus to look at inventory, prices, history of price changes. When I find what I'm looking for, I go through the photos and description. A lazy description or bad cell-phone photos will cost you a sale here. Once I find what I want, at a price I'm willing to pay, I'm off to the dealership to look at that one specific car.

I double check it in person to make sure its what I saw online, and get a salesman's attention for a test drive. If it checks out, I'm ready to make a deal. I already know what I can afford (both total, and monthly, and how long I'm willing to finance for) And what I'm willing to take for my trade in, if trading. I already know what my credit union's interest rate is, but the dealership is welcome to find me a better one.

Last truck I bought, it was in person exactly as it appeared online, and the test drive went well. Found out how much the dealership had in it, and how much they had to make on it in order to sell it, and that's what I paid. All said and done, I think I was only in the salesman's office around 2-2.5 hours. I bought it at Michael Jordan Nissan in Durham, and I'll have to say, it was one of the more pleasant car buying experiences I've had. The salesman was up front about everything, and didn't jerk me around. When the day comes to buy another truck, I'll likely be checking out their inventory first.
 
Reading all this has been interesting. I've only ever bought one new car in my life. All the others I've bought used. The last few I've bought, I've done my research ahead of time. Dealers with good websites are more likely to get my business. I typically use a site like car gurus to look at inventory, prices, history of price changes. When I find what I'm looking for, I go through the photos and description. A lazy description or bad cell-phone photos will cost you a sale here. Once I find what I want, at a price I'm willing to pay, I'm off to the dealership to look at that one specific car.

I double check it in person to make sure its what I saw online, and get a salesman's attention for a test drive. If it checks out, I'm ready to make a deal. I already know what I can afford (both total, and monthly, and how long I'm willing to finance for) And what I'm willing to take for my trade in, if trading. I already know what my credit union's interest rate is, but the dealership is welcome to find me a better one.

Last truck I bought, it was in person exactly as it appeared online, and the test drive went well. Found out how much the dealership had in it, and how much they had to make on it in order to sell it, and that's what I paid. All said and done, I think I was only in the salesman's office around 2-2.5 hours. I bought it at Michael Jordan Nissan in Durham, and I'll have to say, it was one of the more pleasant car buying experiences I've had. The salesman was up front about everything, and didn't jerk me around. When the day comes to buy another truck, I'll likely be checking out their inventory first.


The last car I bought was at Randy Marion Subaru. It was a breeze. They got me in and out in no time. No trying to push extended warranties or service plans. I had done my research and knew exactly what I wanted and what I was willing to pay. They had it. They gave me an OTD price, I countered and we met in the middle. I was happy and I'm sure they were happy or they wouldn't have sold it!
 
Dealers with good websites are more likely to get my business.
What I saw during our last purchase is some of them will have good-looking websites, but the content is bogus. For example, they'll list vehicles that aren't on their lot yet (either on order or representative of what they could get for you). This is usually indicated by stock images of the vehicle as opposed to real images of the exact vehicle. I saw a few of them also list the same exact vehicle--like they're partner dealerships or something. Different named dealerships, but the exact same car.

Those things were peeves to me. Just show me what stock you have on hand.
 
When I find what I'm looking for, I go through the photos and description. A lazy description or bad cell-phone photos will cost you a sale here. Once I find what I want, at a price I'm willing to pay, I'm off to the dealership to look at that one specific car.
Today, this is how you should buy a car. It is setup to work if the dealer employees do their job. You mentioned poor pictures or lazy descriptions cost them a sale. And it should!
I truly believe that the internet and what it offers will change the old guard ways of doing things in a positive way. Those who resist change will be out of business (see Sears). Those who adapt and learn how to treat customers will prosper. It is not nor ever was rocket science. It's all about treating people right. That's how I always did business. That's why I lasted
25 years and did well. That's why the best dealers make more money than the slimy, sneaky dealers who only want the fast buck and a whack on every deal. I'd rather make $500 per and sell 100 cars than make $1000 per and sell 35 cars with 2/3 of the buyers swearing they'll never be back. Dealers spend hundreds of thousands of dollars annually on advertising but the best advertising costs nothing more than a stamp or a salesman emailing the latest sale to previous buyers. The secret is to have happy customers. Pure and simple.
I've talked about the "bones" the top producers get. They are friends, family and referrals of these same people. The manager assigns them to the best salesman who gets the highest CSI and treats them right. The GM or owner wants every customer to be treated like they are their mom, sister, cousin, etc. These deals are pre-worked by the manager.
Do they get $100 over invoice like someone off the street? Nope, they get about halt the markup off and free oil changes for a year and are very happy. Why? Because they didn't spend 5 hours getting jerked around by a process that only benefits the dealer only to end up selling it for $100 over invoice and a $50 mini for the salesman. I believe that most people will pay a little more to be treated with respect, treated fairly and are made to feel appreciated. It's a simple concept.
Folks, the markup on most cars just isn't there. If a neighbor or buddy claims he paid $3,000 behind invoice and you paid $100 over invoice, you feel violated. Well, the only way he paid $3,000 behind invoice is if there was a special rebate (you'd know), he bought a program car (more about that under used cars) or he is lying.
Simple. Chances are he is lying or forgot about his $3,000 trade in that brought the price down to $3,000 under invoice. Otherwise, he is lying.


Last truck I bought, it was in person exactly as it appeared online, and the test drive went well. Found out how much the dealership had in it, and how much they had to make on it in order to sell it, and that's what I paid. All said and done, I think I was only in the salesman's office around 2-2.5 hours. I bought it at Michael Jordan Nissan in Durham, and I'll have to say, it was one of the more pleasant car buying experiences I've had. The salesman was up front about everything, and didn't jerk me around. When the day comes to buy another truck, I'll likely be checking out their inventory first.
See? be treated right and they have a customer for life. Screw them once and they will never be back. Most dealers don't grasp this concept.
That sleepy dealer who has been there for 30 years gets it. You never see a gorilla at his lot yet he's there every month, every year. His secret?
He treats his customers right. Every one. Every time. His best advertising is word of mouth and it is the cheapest advertising out there.
 
@larryh1108

On the subject of pay plans, I have a question purely out of curiosity.

At a dealership which posts a price on the windshield that is discounted from MSRP and that's the price....... trade or clean, take it or leave it ----- how do those sales people get paid?
 
He explained, “Jeppo, I’m able to sell every single vehicle they send me and all of them at full sticker price. We NEVER give one penny of discount. My sales are only limited by my unit allocation. When a rich doctor or athlete comes in and pays $50 or 60k (remember the time period) for a new Mercedes and gets no discount, if we have a nice display of cell phone options, he’s gonna ask us to throw it in, in lieu of any discount. Michael didn’t become #1 by being stupid.
Good story and it reminded me of when you made a lot of money when you sold a car. The good old days!
Thanks for sharing.
 
@larryh1108

On the subject of pay plans, I have a question purely out of curiosity.

At a dealership which posts a price on the windshield that is discounted from MSRP and that's the price....... trade or clean, take it or leave it ----- how do those sales people get paid?
The salesman gets his $50 mini, maybe a spin and another rung closer to a 12 car bonus (or higher).
Since 90% of all new car deals end in a mini anyway, the entire sales staff enjoys the No Dicker Stickers.
See the price, test drive, yes or no.
Only thing left is the trade in. Since the car has already been discounted, the trade in cannot be shown as an over allowance.
If the dealer put it at $3,000 then you'll get $3,000 for it. Maybe $3,500 if you start to walk,
With the one price stickers, 90% of the drama is already removed.
It is a good thing. I worked at a place that pre-priced every car, every weekend.
It worked for a while and then got old to the buyers. Other dealers splashed under invoice prices and, of course, the people went to the whores and ended up paying more than the one price place.
People hate to feel like they paid more than their neighbor for the same car. Dealers feed off of this.
Seriously, who cares if he paid $150 less than you did. I bet he spent 3 more hours there to get it.
I bet your time is more valuable and if both sides just agree to be fair the whole process will become a good experience.
Right now it's confrontational, edgy, suspicious, slimy and there is absolutely no trust between buyer and seller.
That is no way to spend $30,000 yet it's done every day.

I, for one, am thankful that the internet IS changing how we sell cars.
The old way just plain sucked.
 
With all the car buying services available today like Costco,,,,
Funny, I was reading last week how Costco sells more cars than any other dealer.
I never imagined that was possible with some mega dealer groups out there.
I have no idea how Costco sells a car. I have no idea how they pay salesmen.
Do they have salesmen?
I do need to check them out....
 
Funny, I was reading last week how Costco sells more cars than any other dealer.
I never imagined that was possible with some mega dealer groups out there.
I have no idea how Costco sells a car. I have no idea how they pay salesmen.
Do they have salesmen?
I do need to check them out....

I don't think they have salesman. They just hook you up with several dealers and you go from there,I think. I was just getting ready to buy a new car and try them out but my company was just sold and my mom is in the hospital. I'm going to see what shakes out with our new owners before I jump into a new car purchase now. I am going to give the Costco service a shot though since it is a no obligation deal and see what kind of price I can get.
 
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During my last car buying experience, the sales rep did a great job. I went in with a specific set of needs, and she found me a used car with very low miles (I think it has been a 1 year lease or program car or something). Her and I worked out the price, what I was willing to pay, what she could sell it for. It was all great. Then she and I went to the finance guy and started the paper work.

This absolute piece of work almost cost the sales lady the sale. I had my (at the time) 7 year old daughter with me. She was loving the "grown up" stuff. So this guy starts going over add ons, additional paint protection plans, parts and labor warranty upgrades, oil service package, cleaning package, you name it, this dude had a package for it. Problem was...it jacked the price up from what the sales lady and I agreed on about 40-75 per month depending on what I took. So I told the guy "no thank you". He keeps pushing. I tell him "No thank you". He keeps pushing different parts of the plan, perhaps a smaller plan. I say "No thank you." By this time, even my 7 year old looks up at me and says "Daddy, you said no a bunch already...". At this point I looked at the guy and said "I said no. If you try to get me to buy another add on, or anything other than the final price I had agreed on I will walk out this door." Finally, Mr. PushyFinance guy huffs and finishes the paperwork, with the price I had agreed on. While they are prepping the car for us to leave I see the sales lady packing up to go home and she comes over to thank me again and make sure all is well. I flat out told her that that dude almost cost her an hour or so of her time and a lost sale because I was 1 "no" away from leaving. She was livid.

I recall it was the first time I ever really left a negative review for a place. (It was Bob King Mazda in Winston). The sales lady was absolutely wonderful and I would shop with her again. But that finance guy...
 
What I saw during our last purchase is some of them will have good-looking websites, but the content is bogus. For example, they'll list vehicles that aren't on their lot yet (either on order or representative of what they could get for you). This is usually indicated by stock images of the vehicle as opposed to real images of the exact vehicle. I saw a few of them also list the same exact vehicle--like they're partner dealerships or something. Different named dealerships, but the exact same car.

Those things were peeves to me. Just show me what stock you have on hand.
Another perfect example of someone going thru the motions instead of working hard.
Like every walk of life, you find the hard workers, the workers who are there for a paycheck and nothing more and the ones who work harder at not working hard (looking busy but just screwing off) than actually trying. Then you have those who just don't give an eff about anything they say or do.

Buyers aren't stupid. Some dealers (or GMs) know each other well, are buddies and probably worked at a dealer together when they were younger.
They will swap inventory that has been there for 45 days with their buddy to get different exposure and to possibly move it.
There is nothing shady about that but you would think that a good internet manager would remove (any) unit that is no longer on his lot to avoid
confusion and possibly pissing off a customer. When I ran the internet site, first thing every morning I would pull the sales board and remove the sold units. Units that were still pending (waiting for finance approval or the cosigner to come in or whatever) I'd put in a pending status which removed it from the website but did not delete it, just in case it came back. It took a few hours but it is the right way to do it.
Some lazy guys will remove the sold units when it wasn't busy or the day before his day off or when his manager mentioned it needed updating.

Consumers notice the little things. There is a good chance that you piss off more people than do contact you from sloppy pictures, descriptions, spelling
errors or just plain substandard work. The thing is nobody knows how many they lost because they don't call up and tell you. They just move on to
another dealer's site.
 
Reading all this has been interesting. I've only ever bought one new car in my life. All the others I've bought used. The last few I've bought, I've done my research ahead of time. Dealers with good websites are more likely to get my business. I typically use a site like car gurus to look at inventory, prices, history of price changes. When I find what I'm looking for, I go through the photos and description. A lazy description or bad cell-phone photos will cost you a sale here. Once I find what I want, at a price I'm willing to pay, I'm off to the dealership to look at that one specific car.

I double check it in person to make sure its what I saw online, and get a salesman's attention for a test drive. If it checks out, I'm ready to make a deal. I already know what I can afford (both total, and monthly, and how long I'm willing to finance for) And what I'm willing to take for my trade in, if trading. I already know what my credit union's interest rate is, but the dealership is welcome to find me a better one.

Last truck I bought, it was in person exactly as it appeared online, and the test drive went well. Found out how much the dealership had in it, and how much they had to make on it in order to sell it, and that's what I paid. All said and done, I think I was only in the salesman's office around 2-2.5 hours. I bought it at Michael Jordan Nissan in Durham, and I'll have to say, it was one of the more pleasant car buying experiences I've had. The salesman was up front about everything, and didn't jerk me around. When the day comes to buy another truck, I'll likely be checking out their inventory first.

I had a great experience with Michael Jordan Nissan when I bought my last new car (for me) in 2007. They had exactly what I was looking for in a 3 different Frontiers, so I contacted the Internet Sales Dept and said “out of these 3 Frontiers, which one can you get me OTD for $X?”. They emailed me back and said which one, then, because I was at work, they drove it to me to take it for a test drive. I told them I wanted it, so they drive back, detailed it while the manager drew up the paperwork and towed it back to my work, had me sign the papers, give them the check and off they went. Best experience, hands down, ever. When I am ready to buy a used vehicle now, I always check their inventory first.
 
During my last car buying experience, the sales rep did a great job. I went in with a specific set of needs, and she found me a used car with very low miles (I think it has been a 1 year lease or program car or something). Her and I worked out the price, what I was willing to pay, what she could sell it for. It was all great. Then she and I went to the finance guy and started the paper work.
I quoted this and highlighted the wording because I have left out a very important part of car sales. The female sales person. Every time I wrote salesMAN, he salesMEN, etc, i cringed because female sales staff represent a large part of the force and I have worked with countless, wonderful and talented sales women. I always felt bad not mentioning them but in my mind when I write "salesman" I mean both men and women. I want to thank all the wonderful woman I have worked with over the years. I have found there are a lot less female turds (percentage wise) than male turds. They get it. However, I have also worked with a few female sharks who would rip you inside out if you let your guard down, just like any male shark. The funny thing is, they were usually very attractive and when a male buyer was lost in thought, they would eviscerate them and the buyer would thank them when they were done getting castrated. Funny to watch. Good times!

I flat out told her that that dude almost cost her an hour or so of her time and a lost sale because I was 1 "no" away from leaving. She was livid.
If she was livid I would bet that you were not the first one who almost left with this guy. I bet some did leave and she lost the sale.
Feedback is important and enough bad comments and that Finance Guy is probably working somewhere else.
Owners do not like employees that cost them sales.
 
The salesman gets his $50 mini, maybe a spin and another rung closer to a 12 car bonus (or higher).
Since 90% of all new car deals end in a mini anyway, the entire sales staff enjoys the No Dicker Stickers.
See the price, test drive, yes or no.
Only thing left is the trade in. Since the car has already been discounted, the trade in cannot be shown as an over allowance.
If the dealer put it at $3,000 then you'll get $3,000 for it. Maybe $3,500 if you start to walk,
With the one price stickers, 90% of the drama is already removed.

Exactly. I don't need drama.

I figured that was about it for the pay plan. Didn't know about the spin. Quota bonus I figured on.

Back in 2000 I got into Subarus with a dealer that has used that pricing plan. I liked it and the cars enough that I got into a 2 cars, trade one every 4 years rotation.

The newer car gets 100% of the driving for 4-5 months of the year while the older one sits in the garage and maybe 10% of the driving the rest of the year. Once it hits the 4 year mark its older brother is 8 years old and gets traded.

Now the 4 year old car gets 90% of the driving for 7-8 months and sits in the garage the rest of the time for another 4 years. So at year 8 that one is ready to be traded with 80-85,000 on the odometer. They like to see me come in for a trade.

I do the extended warranty. (Saved me a transmission on one of them.) And I let them do service work just enough to keep them happy.

I chuckled when you mentioned having the car detailed before going to see about trading --- yep, good place to spend $100, well worth it.

I look at their website to see what they have or have coming. We take a ride on Sunday to walk the lot and let the wife pick the color. So the car is chosen before we walk in the door and we know the price. All that's left is a quick drive to see if it fits and, of course, the trade in.

I do the KBB and NADA values research and figure if they come within spitting distance then we've got a deal. They haven't disappointed me yet.

The sales manager was the salesman on my first purchase and when I walk in I go to his desk and say, "Pete, who needs a sale?"

You would have had me on your call list. One hour, tops. Have a nice day, I'll pick it up tomorrow.

And thank you for doing this thread. You are sharing great information with us all.
 
Have you ever thought of teaching sales in general?
Thanks!
I have taught a lot of salesmen over the years.
I train them right.
I train them to be polite, honest and to actually listen to the customer (so important and so few do it).
I train them to NEVER lie. Never. If a buyer catches 1 lie, he'll never trust him again during the process.
I train them that the best way to make a deal happen is to allow the customer to feel as being part of the process.
I teach them how to structure the deal so the customer understands what is going on.
Many trainers train the salesman how to confuse the buyer to make the most money.

I have read, many times and from many different sources, that 80% of the reason someone buys from you (no matter what it sold) is because the buyer likes you and trusts you. 80%. That means you don't have to be the cheapest, just the best.
It is true, from my experience.
When everybody sits down to begin the process, the buyer is ready to jump out of their skin because they know that the screwing is about to begin. 90% of the salesmen are anxious (in a bad way) because the manager told them that if they lose this deal they're probably going to lose their job (a common motivational tactic. Motivational? Really?) Talk about shoving a stick up his backside and telling him
to be polite to the buyer. A buyer senses when a salesman is tense. The buyer wonders why. The salesman is not himself. His personality doesn't come out because he is afraid to mess up this deal. It is truly a tense time.

When the buyer sits down to get to business, the manager assigned to that salesman watches from (what is called) the tower. It is usually a desk or 2 on a raised platform near the center of the deal working area. The tower is where the numbers are worked (unless the salesman is one of the aces we talked about. They can work their own deals. When a salesman has a customer at his desk, the manager is said to be "working the deal" with the salesman. The salesman is an extension of the manager and usually works all his deals with him. They know each other. The manager usually knows the salesman's weakness and strengths and works him that way ( a good manager, that is).
A lazy manager makes the salesman work the deal exactly as he is told by the manager. Word-for-word. The manager listens to make sure he does as he says. The good manager allows the salesman to use his natural abilities and personality to get the same result. Hey, whatever works is how it's done but the old school guys don't care, they do it their way.

So, everybody is super tense. The buyer trusts nobody and their head is on a swivel, watching for the bad guy to come out at hurt them.
Really, they look around and around and around waiting for the ambush. No trust what-so-ever.

Working the deal (as a manager) is the heart of the sale. A manager may have 7 or 8 salesmen that he is working with on a busy day.
Some are pros and need no help. Some have experience but like the manager to be the bad guy. Some need to be guided every inch of the way.
Some have people in finance and some have people who just got there. Some are mid-deal. The manager has to juggle them all and not lose any deals (upper management is watching). It is a demanding job but I always enjoyed it. I liked the pace and the action and I ike people and they felt it.

Every dealer has their own way and own process. You've seen me mention "the process" many, many times. The process is just that. From the time a customer walks in until the time they leave, every dealer has a process which must be followed, especially for new cars. Used car have a different process so we'll cover that in the used car thread.

I like my process but if I work at a dealer that has a different one, I have to do it their way. I usually work for dealers that do it the way I prefer.
Sometimes (many times) the dealer fires the GM (poor performance, poor CSI, missing important stair steps, not enough improvement over last year, etc. You know you are at a good dealer when the same GM is there year after year. A lot of dealers have a different GM every 6 months, 9 months or (usually) a year. The GM determines the process used. A new GM usually has his own management staff of guys he has worked with over the years, who he trusts with his live and who know the process he prefers and uses. So, if you are a good manager at a dealer and a new GM comes in the chances are that you will be replaced within 3 months is pretty great. Of course, a new GM will see what he has on staff
while he recruits "his guys" and if a manager just shines like the sun, he will keep him and probably put him under his buddy who he already contacted for the same job. It's an ugly business. It is very similar to a new head coach in football being hired. He has "his guys" who he wants on his team. He may keep someone who is there or the owner loves but chances are everybody goes.

...(con't)...
 
THE PROCESS.... Ah yes, the process.

If you've been reading this thread and not skimming it, you will see that I have used this phrase over and over.
It has a vague connotation with a negative light on it.
That was deliberate and I purposely kept it vague so I can take my time in explaining it.
The process is probably the most important phase in working a deal. I believe it will set up a successful
transaction or a negative experience. Done right, the process will keep everybody pleasantly involved and
happier overall. I will explain my process and then touch on the differences between my way and a few other ways.
For obvious reasons, I prefer my way and will explain why as we go along.

The process-My Way. (by Frank Sinatra?)

My process was not created by me. It was taught to me back in '91 when I was a newbie. Since I didn't know any better at the time, I thought this was the only way to sell a car. As I gained experience and worked with different managers and GM, I saw the other processes but since I was already successful with the way I was originally taught, I refines this way and moved to another dealer if the one I was at change philosophies.
I guess a better word for "process" is philosophy. That may explain it better but it is harder to type.

As it sounds, a process is the way to get from A to B to C and then to D.
In simple terms, a car buying process is relatively simple.
Greet customer, find customer their car, work out the price, make a deal.
A to B to C to D.
Sounds so simple yet we know it is not that simple. Or is it?
I think it is that simple if you focus on what the goal is.
The goal is finding the right car to satisfy the customer's needs at a price they can afford.
Simple again, right?
Yes it is if you just follow that path.

Like I said, the most important part of the process happens right up front.
The buyer you just met already hates you. They don't know you but they know you want to rape them.
They've been there before or their friends and family tell them how awful it is to buy a new car.
Whatever the reason, they already dislike everything about you and don't trust you one tiny bit.
Great way to start, huh?
Well, it is true. No trust at all. They don't even like how you part your hair.
So, how do we be made comfortable. They need for you to make them comfortable with your very presence..
They need to see you as a human being instead of a monster.
Ok, how do we do that?
I found that if you just talk to them about anything other than buying a car, for a few seconds or minutes and you can break the ice and get a dialogue going. Getting that dialogue going is crucial in making the buyer relax,,,, just a bit.

Meet-Greet-Qualify.

Meeting someone is easy. You walk up to them and say "hi".
Simple and direct.
Greet:
A salesman is supposed to say after that is "My name is Larry. Are you here to see someone specific?"
(It is a mortal sin in the business to take another salesman's customer. It's called skating and if done enough, you are gone!)
"No? great. I'd be glad to help you. As I said, my name is Larry. May I have your names?"
"Jack? Jill? Nice to meet you, I will do my best to help you and to take care of your needs"
"Let's go inside so you can tell me what it is you need for me to do for you". (Let the customer feel like they are a part of the process.
Remember, mean what you say. Customers can tell if you are being phony. You REALLY are there to help them find the right car.

Next: Qualify

The qualify stage is where the processes split and go separate ways.

The other way is to take the customer out to find a car they are interested in.
Walk the showroom. Walk the lot. Find out what they are looking for and help them find a car they are interested in. You can't sell a car if they don't land on a car, right? Take them on a test drive so they see if they like it or not. Do not even consider bringing them inside if they do not land on a car and go for a test drive. This is not a step you can skip and keep your job. (This was mentioned previously). How can you sell a car if they don't find a car they like? Right?

OK, without going further, this is the process for the other way of moving forward. This IS NOT the way I work a deal. IMO, this is backwards for
several reasons which I will explain as I go along. However many successful dealers (and many failed dealers) prefer this way and preach it as their gospel. Deviate and you won't be around very long. I disagree with it on many levels.
 
Funny, I was reading last week how Costco sells more cars than any other dealer.
I never imagined that was possible with some mega dealer groups out there.
I have no idea how Costco sells a car. I have no idea how they pay salesmen.
Do they have salesmen?
I do need to check them out....
From my limited understanding, it's kinda like Xplan...if you are familiar with Ford.
Costco sends you to pre-approved dealers that participate in their auto program.
You go in...show your Costco card...they pull out Costco pricing. Done deal. No haggle.
Xplan with Ford is basically invoice if I remember correctly. I do not know what discount the Costco gives....but if they are selling a lot of cars...it must be decent...or people just like the no haggle discounted price.

DS

Sent from my XT1575 using Tapatalk
 
My Process, my way.

After the meet and greet I like the salesman to bring the people inside to meet me.
I have them say "Let's go inside so we can save time and to find out exactly what you need from me.
Once inside and seated, the salesman pulls out a pad and writes their names down so he doesn't forget them. At this time it is too early
to ask for a phone number or email address. IMO it's just too soon. Trust has not been established yet. I know I wouldn't want
to give that info out after 2 minutes and still have no trust earned.

At this point, I have the salesman motion to me to come and say "hi". Him getting up and finding me is a bad sign already to the buyer.
"There he goes already! Pulling the disappearing act and we just got here!" Not a good move. If I am not at my desk he can call me on my cell but I
should be watching what is going on already unless I went to the bathroom.
I come over to introduce myself. If the salesman is a newbie or fairly new, I sit at the desk and we chat.I want to break the ice and get a little
comfort going. I tell them I will be working the deal with "Joe", their salesman. I tell them I am the man behind the curtain who no one sees.
(Bad reference to The Wizard of Oz) but it is true. I want you to know who Joe goes to talk to when you are working out the deal. I just want an
open and honest relationship here so we can make you happy and hopefully sell a car too! I like to have everything out in the open, no games.

Now, this should help break the ice. It doesn't always work but it does in most cases. They see I am not the ogre they think I am. I'm just a guy trying to do
his job and to work with the buyer to make a deal. That's all. No mystery. No games. Just communication.
This is the end of the "greet phase".
Meet - check
Greet - check
Qualify:

To me, qualify is the most important part of the process (as mentioned). If you notice, the "other" process jumps past the qualify stage to get them to land
on a car. I feel this is counter-productive in many ways. To me, qualify means many things. Each buyer has different wants and needs. Each buyer has different abilities to buy a car. Every customer is different in some way. If you treat everybody the same in a cookie cutter process, a lot of time will
be wasted and a lot of times the customer get aggravated. Neither one is any good or productive. It sours your new relationship.

If the salesman has worked a lot of deals with me, he has a checklist of important questions we need to know before we proceed. If he is a newbie or trainee,
I pull out the list and cover it while the trainee watches and listens. A few questions may make the buyer feel uncomfortable but once you move on,
they'll see why it was asked. It makes them feel involved and that we actually listen to their needs.
So, I tell the customer that I want to save time and energy to make this go smooth. I tell them I have a list of questions that will help us help them better.
I ask if I can proceed and they usually say "yes".

Ok, what model are you here to see today? RAV4. Ok, thanks.
Have you driven the 2019 Rav4 yet? Rented? Friend? Other dealer? No? Ok, we'll get you behind the wheel of one right away.
Is there any color you want or don't want? Silver and white, ok. No black or red. Got it.
Any options you must have or don't want? Sunroof would be nice but not a must. AWD a must. Nothing I don't want that I know. OK, great.
So, you want to see a Rav4 that is Silver or White and has AWD. A sunroof would be nice. Nothing in Red or Black.
OK, we're doing great. I'm sure we have something that will work for you.
Ok, were you planning on paying cash or financing? Finance? ok, great.
Have you ever financed a car before? Yes? good.
Were your payments good? Perfect? excellent.
Do you know about what your credit score is? 720, excellent.
Would you have a trade in? No? ok.
How long do you keep your cars? 5 or 6 years with 100k max miles? Got it.
Do you plan to keep this Rav4 thee same amount of time? No? You son is going to college in 3 years and you want to give it to him? Ok, got it.
Do you plan to put any cash down? $1000. ok, very good.
Is there a payment range you are comfortable with? Max $350. ok, got it. (OH NO! DID I JUST ASK THAT? DID THEY JUST ANSWER THAT? More about this later)
Great. You want a new Rav4 with AWD in silver or white. No black or red. A roof would be nice.
You have $1000 down and want to finance with a payment no more than $350 a month.
Sound right?
OK, give me 5 minutes and I will pull the inventory book and see what we have that should work for you.
Joe, I'll call you in a minute with some stock numbers.
I go to the inventory system and sort by color, then with AWD and print a list.
(notes to self)
We have 1 silver one that has a roof but also has the performance package with leather, GPS and sport wheels (a usual package with a roof)
We have 2 of the same car in white with no roof. Ok, let's see what they say. It is $3500 cheaper without the sport package.
(goes back to the customers)
OK folks, good news. We do have 1 in silver and 2 in the white. Both very nice units! The white ones do not have a power roof. The silver one does.
(Joe, here is the stock number. Pull the silver one up front and prepare it for a *walk around. (more details soon))
While Joe brings the silver one up front I want to mention that we only have this 1 in silver. To get the power roof, Toyota offers it only in a sport package.
The sport package includes leather/heated seats, a GPS and sport wheels. I mention this because I don't want you to think I am trying to get you to
spend more money. This is the only way to get the power roof from the factory. If you prefer the white one, our service department can have a power roof added and you'll save money because you don't have to pay for the GPS, wheels and leather/heated seats.
OK, Joe is here now. Check out the silver one and take it for a ride. If you want, he will bring up the white one next.
Right now he will show you all the features in what we call a *walk around.

Did I do OK?
Did you see how much info I got in less than 5 minutes without pissing them off?
Did you see how they told me what they wanted?
Did you see how I gave them options and not the other way around?
Did you see how I explained why I brought up a vehicle that had more than they asked for?
Did you see how everything was explained?
Did you see how they felt part of the process?
Is this way better than dragging them around the lot, looking for a certain color with AWD?
The other process is designed to wear down the buyer by walking them around the lot. It may be
a hot day or a cold day. They may not be in the best shape. They are already getting tired and their defense is already wearing down.
IMO, this process sucks. However, a lot of dealers do it this way.

The process I prefer makes the buyer feel involved. They sit in the comfort of a warm or cool showroom while the salesman
brings the car to them. They feel special, not tired. They are still fresh. They've been there 15-20 minutes and are already put at ease (somewhat).
With my short "qualify" list I have a ton of info that will go a long way. This already helps the finance office greatly. This will make the
paperwork process less stressful going in. Can anybody see what I am talking about?
 
From my limited understanding, it's kinda like Xplan...if you are familiar with Ford.
Costco sends you to pre-approved dealers that participate in their auto program.
You go in...show your Costco card...they pull out Costco pricing. Done deal. No haggle.
Xplan with Ford is basically invoice if I remember correctly. I do not know what discount the Costco gives....but if they are selling a lot of cars...it must be decent...or people just like the no haggle discounted price.

DS

Sent from my XT1575 using Tapatalk

We tried to use the Costco program on our last new Car (just purchased it in April 2019) we used the Costco in apex and wanted a Toyota. Costco revered us to the Hendrix dealership that's is next door for the Costco price. We never saw the Costco price. We worked a deal anyway and got the car we wanted at the price we wanted, but still never saw the Costco price.

I'm not sure if that's how it works in every Costco car program but that's the way it happened to us.
 
From my limited understanding, it's kinda like Xplan...if you are familiar with Ford.
Costco sends you to pre-approved dealers that participate in their auto program.
You go in...show your Costco card...they pull out Costco pricing. Done deal. No haggle.
Xplan with Ford is basically invoice if I remember correctly. I do not know what discount the Costco gives....but if they are selling a lot of cars...it must be decent...or people just like the no haggle discounted price.

DS

Sent from my XT1575 using Tapatalk
Ok, I see. Thanks!
I don't see how they say Costco sells more new cars than anybody if they don't actually sell them. They have a 3rd party do the paperwork.
No matter, if it works for the buyers, all is good!
I haven't worked at Ford since '07. If I remember correctly, Ford employees get the X Plan which is, basically, invoice less rebates.
I believe that Ford pays them a $500 rebate in the form of dealer cash to pay for the commission ($50 mini) and other expenses.
Of course, the dealer also keeps the DOC fee which is another $500-$800.
Also, I think they have the Z Plan also for the employees of companies that supply parts for the new cars. This includes anything that is not made at the factory.
Radios, batteries, etc. If it's on the car and not made at the factory, those employees get the Z Plan price. I believe it is $500 over invoice, less rebates.
We used to kid around that a walk in gets a better deal than Z Plan buyers and store employees (basically the same $500 over invoice).
 
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The Walkaround, part of the New Car process.

The walkaround is a required process that the factory insists on. It is even addressed in the CSI survey.
It is important because the customer gets to see all of the features of the car they are looking at.

The salesman parks the car and opens every door, tailgate and hood. The vehicle is wide open.
The salesman then walks the customer around the entire car pointing out the features...
Cup holders, computer USB ports, the child LATCH system the armrest storage, the spare tire (if there is one), the emergency kit (if there is one) all the controls up front, etc. It is a detailed showing of the car's features.
It's a way to get the customer involved and to smell the new car smell. They sit in it and the spouse takes pictures of them in it. They touch it, feel it, smell it and fall in love with it. They look under the hood and see the huge plenum and where the battery is. He shows them the available dip sticks, windshield reservoir, etc. This is a lengthy process. Bigger dealers have a designated area for walkarounds, under a canopy for bad weather days. Other dealers have a spot in service to do it.
Small dealers have the salesman do the walkaround on the sales floor where a similar unit sits, if the weather is bad.
It is an important part of the process, as mentioned. It allows the buyer to form a bond with the car.

After the walkaround the salesman copies their license, gets a phone number and takes them on the test drive.
During the test drive, the salesman should explain the horsepower, the newest technology transmission with no shift points, how the cruise works, how the steering wheel controls works, etc. The test drive is a good experience because it is a new car with no issues. The Used Car test drive is another story. More on that later.

The next step in the process is to get them back inside and sit them down. The negotiations begin. It starts with a blank sheet of paper with their name and phone number on it at the top with their email address. On this sheet of paper is what looks like a large "plus" sign which divides the paper into 4 quarters or quadrants. The salesman talks out loud while he writes in each quadrant....
Top left: Sale Price (MSRP written here)
Top Right $1000 (down payment)
Lower left: rebate or trade info
Lower Right: payment desired.

As he writes, he tells the buyers what he is writing to keep them in the loop.

No sense taking it further right now since no 2 deals are the same. Let's just say we work the deal WITH the customer's input until a deal is made
(or not made)
 
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