A Note From A Leaf Salesman

[DNAinaGoodWay]

Like any other system, it will evolve. The dealerships that can better adapt to internet sales will do better, the others will die off. Hopefully.

There's a trend here for dealerships to convert to a "no haggling" one price model, but I'm not sure if it's better for them, or us.

One things for sure, as the struggle Tesla is going through shows, dealerships and their associations aren't going away any time soon.

[DarkStar]

My largest complaint with car dealerships is that they over-complicate the purchase process. When I bought our Leaf, I already had the "price" from the dealership and I knew the destination charge and what the title and registration fees were. The dealer worked with the local electric vehicle group for a number of months educating us on the Leaf (before release), so I wanted to give them my business, even if another dealer offered $100 or $200 less.

In my opinion, the dealership should have zero concern about how they are paid for the vehicle - so we pre-arranged our financing with our local credit union.

Now, we go to the dealership to pick up the car and all of the sudden they "forget" the price (good thing I brought the NissanUSA.com printout), then make me submit to a "mandatory" NMAC credit check - despite financing already arranged.

Next, they send us to the "finance" office to take care of the title and registration - where they attempt to up-sell everything in their arsenal. Once I convince him we weren't budging from what was already arranged, he finally got the idea and wrapped things up. We finally had the keys to the car and were able to drive it home about 2.5 hours after we walked in the door. For comparison, we closed on our house in about 30 minutes...

The two largest issues that caused us to be dissatisfied with the process where the mandatory credit check and the repetitive up-selling (we had to tell him "no" at least 5 times for a single extended warranty).

[kikbuti]

You appear to be missing a lot. Customers are forced to do the dance. The dance is perpetuated by the dealers. If I know I cannot get the vehicle price any lower and it is fair I will pay that price. But dealers don't want that because they couldn't gouge so many people that way.

As for the F&I guys they deserve their bad rap. Despite saying no they will continue to push it or give you attitude etc. The car buying experience would be a lot better without them in the picture. If people want those things they can/will ask. If they don't you don't have to try to shove it down their throats or coerce them into paying way too much for something.

You are leaving out the part about a trade-in. Most car sales involve a trade-in. There is no way for you to "know" that you cannot get a better price. I know that is what you want, but it's not going to happen. As long as there is a profit involved, there is a retailer willing to accept less profit and sell the vehicle cheaper. People are not going to stop trading in vehicles. There is a MSRP. If that's what you want, just pay it. Don't do the dance. It is unfair for you to assume that the dealer wants to gouge you. Is it possible for a dealer to want to get you the car you want and make an honest profit? Is that possible. Or does your mind envision only that everyone is out to get you? Do you negotiate for groceries, appliances, electronics or houses? I bet that some you do and some you don't. and what determines that a dealer made too much money on a deal? How many dealers are out of business that were in business 10 years ago. Apparently, they didn't make enough money.

[MikeinDenver]

You appear to be missing a lot. Customers are forced to do the dance. The dance is perpetuated by the dealers. If I know I cannot get the vehicle price any lower and it is fair I will pay that price. But dealers don't want that because they couldn't gouge so many people that way.

As for the F&I guys they deserve their bad rap. Despite saying no they will continue to push it or give you attitude etc. The car buying experience would be a lot better without them in the picture. If people want those things they can/will ask. If they don't you don't have to try to shove it down their throats or coerce them into paying way too much for something.

You are leaving out the part about a trade-in. Most car sales involve a trade-in. There is no way for you to "know" that you cannot get a better price. I know that is what you want, but it's not going to happen. As long as there is a profit involved, there is a retailer willing to accept less profit and sell the vehicle cheaper. People are not going to stop trading in vehicles. There is a MSRP. If that's what you want, just pay it. Don't do the dance. It is unfair for you to assume that the dealer wants to gouge you. Is it possible for a dealer to want to get you the car you want and make an honest profit? Is that possible. Or does your mind envision only that everyone is out to get you? Do you negotiate for groceries, appliances, electronics or houses? I bet that some you do and some you don't. and what determines that a dealer made too much money on a deal? How many dealers are out of business that were in business 10 years ago. Apparently, they didn't make enough money.

You can get multiple quotes on your trade in. We did with my wifes car. It is not unfair for me to assume the dealer wants to gouge me. I have seen it many times first hand let alone thousands and thousands of stories. I understand they need to make a profit to stay in business. But that doesn't have to be an exorbitant amount. I bet many of those dealers went out not because they solely made less money but probably due to despicable practices and people no longer shopping there. The biggest issue is the process and the BS. One can always shop for a better deal endlessly. Why can't dealers just post their price online like pretty much every other type of retail product and let people choose where they purchase it. You look up a TV at Best Buy then see it on Amazon for $200 cheaper. You buy it off amazon and wait or you go to the local best buy and buy it. But there is no BS!

I as an educated consumer know what the invoice is, I know about the holdbacks etc. So I will pay what I deem a fair price. Not more.

[donald]

Much as my heart aches for anyone (service deliverer or service user) caught out in a load of badly thought-out mis-planned service delivery protocols, all I can say is that this is the same in many many walks of life. The details will vary, but it is not unique to car sales.

So all I can really say to the salesman, appreciative as I may be at his effort to regale the finer points of his trade, is 'Awww Didums!'.

To my mind, this is an easy fix with a better sales model, which is exactly what many here have already said. I'll suggest an alternative, though. For example:-

First, you have vehicle manufacturers who makes the cars and interact with their dealers, which may be franchise or business units owned by the VM.

Second, the dealers provide a priced service to the VM for a) providing some defined test-drive and acquaint visit, and b) handling and delivering a car for a customer.

Then, an interested customer registers an interest with the VM on line. The VM makes an appointment for the customer to visit a dealer nearby, and they can pick the dealer who, in their opinion, provides the best mix of convenience to the customer and price for the acquaint visit (taking into account feedback from customers who have attended previous acquaint visits at that site).

The customer attends the acquaint visit and test drive. After, they go away and think about it. If they want the car, they click on a 'buy-it-now' on a website at the price given in the literature they were presented with, or they don't buy the car. They can ask the dealer of their choice to 'buy-it-now' for them if they choose or can't be bothered/don't have internet.

VM delivers car to dealer of customer's choice (default, the acquaint dealer). Dealer provides PDI and handover service.

Dealer charges VM for acquaint visits and the PDI/handover. Dealer competes with other dealers to win acquaint visits and PDI/handover based on pricing to the VM and customer feedback. It might easily be possible that one dealer in an area delivers all the acquaint visits but hands over few cars, and another gives few test drives but is good at delivery. Both will make money in this model.

Is this more of a modern model that could be followed? I'm sure there are plenty of wrinkles that would need to be ironed, but it sounds a load better than the model described above. The only thing the salesman's note says to me is that the current system is a failed system.

[TomT]

A fantastic podcast on the actual workings of the automotive dealership sales and compensation process with real sales people and general managers. A fascinating 70 minutes.

http://www.thisamericanlife.org/play_full.php?play=513" onclick="window.open(this.href);return false;

[kikbuti]

You can get multiple quotes on your trade in. We did with my wifes car. It is not unfair for me to assume the dealer wants to gouge me. I have seen it many times first hand let alone thousands and thousands of stories. I understand they need to make a profit to stay in business. But that doesn't have to be an exorbitant amount. I bet many of those dealers went out not because they solely made less money but probably due to despicable practices and people no longer shopping there. The biggest issue is the process and the BS. One can always shop for a better deal endlessly. Why can't dealers just post their price online like pretty much every other type of retail product and let people choose where they purchase it. You look up a TV at Best Buy then see it on Amazon for $200 cheaper. You buy it off amazon and wait or you go to the local best buy and buy it. But there is no BS!

I as an educated consumer know what the invoice is, I know about the holdbacks etc. So I will pay what I deem a fair price. Not more.

Thank you, MikeinDenver. I still say that it is unfair for you the characterize the dealer as wanting to gouge you. They want to earn as much as they can, just as you do on your job. You're not gouging your employer or your customers, are you? Nobody is trying to gouge anybody. There's the retail price, the dealer's invoice, the dealer's actual cost, AND the dealer's inventory cost. When you're buying a car, you're the hero. Of course, it's better for the dealer if you pay full retail, but that's not gouging you. It's the suggested retail. If you don't like the suggestion, offer your educated price.

Some dealers do post prices online. Some price MSRP plus SALE prices. Of course, once you see the SALE price and go to XYZ dealer down the road and buy it for $200 less, that dealer just shot himself in the foot by advertising a sale price. For that reason, many unscrupulous dealers advertise a price that is below cost. No other dealer is going to undercut it. When you show up to buy it, they use all kinds of tricks to either bait and switch or sell additional items to make the deal profitable. With an electric car like the Leaf, the dealer isn't going to earn money servicing it. Keep in mind that the service and parts departments of dealerships absorb the total cost of running the dealership (absorption rate.) The dealers' profit comes from sales of new and used cars.

Yes you can get multiple quotes on your trade-in. In Ohio as in many states, we pay sales tax on the difference between the purchase price and the trade-in.... so it IS advantageous to trade it in instead of selling it outright to CARMAX. Dealers lowball you on your trade-in.... as much as 5 or 6 thousand dollars. They're taking a chance that they will be able to sell your trade and make a profit, so their trade-in allowances are typically very conservative.

Bottom line... the horse trading business IS necessarily complicated. It's not complicated if you agree to pay retail like everyone does when they buy a Tesla vehicle. It is not too complicated for someone like you. I can tell that you have the skills to buy whatever you want. I understand that people want everything simple. The more that something costs, the more complicated the purchase. Automobiles are typically the second largest purchase people make, so buying one will be the second most complicated.

[MikeinDenver]

]

Thank you, MikeinDenver. I still say that it is unfair for you the characterize the dealer as wanting to gouge you. They want to earn as much as they can, just as you do on your job. You're not gouging your employer or your customers, are you? Nobody is trying to gouge anybody. There's the retail price, the dealer's invoice, the dealer's actual cost, AND the dealer's inventory cost. When you're buying a car, you're the hero. Of course, it's better for the dealer if you pay full retail, but that's not gouging you. It's the suggested retail. If you don't like the suggestion, offer your educated price.

Some dealers do post prices online. Some price MSRP plus SALE prices. Of course, once you see the SALE price and go to XYZ dealer down the road and buy it for $200 less, that dealer just shot himself in the foot by advertising a sale price. For that reason, many unscrupulous dealers advertise a price that is below cost. No other dealer is going to undercut it. When you show up to buy it, they use all kinds of tricks to either bait and switch or sell additional items to make the deal profitable. With an electric car like the Leaf, the dealer isn't going to earn money servicing it. Keep in mind that the service and parts departments of dealerships absorb the total cost of running the dealership (absorption rate.) The dealers' profit comes from sales of new and used cars.

Yes you can get multiple quotes on your trade-in. In Ohio as in many states, we pay sales tax on the difference between the purchase price and the trade-in.... so it IS advantageous to trade it in instead of selling it outright to CARMAX. Dealers lowball you on your trade-in.... as much as 5 or 6 thousand dollars. They're taking a chance that they will be able to sell your trade and make a profit, so their trade-in allowances are typically very conservative.

Bottom line... the horse trading business IS necessarily complicated. It's not complicated if you agree to pay retail like everyone does when they buy a Tesla vehicle. It is not too complicated for someone like you. I can tell that you have the skills to buy whatever you want. I understand that people want everything simple. The more that something costs, the more complicated the purchase. Automobiles are typically the second largest purchase people make, so buying one will be the second most complicated.

Maybe I am bundling it all together. Selling gap coverage for $800 that you can get for $25 a year is gouging and seriously. I would be willing to pay a bit more if the process was better. But if I know I'm going to have to go through the wringer I'm not going to pay for that privilege. As for the dealer listing it below cost just to get you in there, just walk right back out as soon as that is known. I had an experience at a Ford dealer around Sacramento that had a sticker on a truck of around $14k. I went in and we started the process and they said the price was $24k. I said no no the sticker on the truck said $14k. Well come to find out after the test drive they had swapped the stickers on the truck and it now said $24k. I walked right out and next door. The salesman at the Dodge dealer showed me a sheet showing what they had in stock for what price. Drove it. Bought it. I felt it was a fair price so I paid it, no haggling, no BS. Buying my house was easier than buying a number of cars. That is not how it should be. All a dealer/salesperson has to be is respectful, honest and upfront. There are a million car dealers and no reason to buy at a bad dealer.

[dndrich]

The long history of why there are dealers to begin with is fascinating. The need for parts distribution and other considerations have led to the antiquated system we have now. Nobody likes it.

The thing that I find most interesting and sad is the fact that these companies spend billions on research and development, produce amazing cars with outstanding engineering, and then have so little control over the last little piece of distribution. Most of the sales folks know so little about their own vehicles. They just need to move the merchandise. So when a vehicle like the Leaf comes along, the company tries to educate the sales force, but usually we know more about the car than they do. This is where the Tesla model is better.

[donald]

The thing that I find most interesting and sad is the fact that these companies spend billions on research and development, produce amazing cars with outstanding engineering, and then have so little control over the last little piece of distribution.

Very good. That's quite the 'killer argument' to put to the CEO of a few VMs!

Mind you, it is possibly explained that technology developments are lead by engineers who can objectively see what needs to be done, even if the accountants interfere in the resources to do it, whereas the business models for dealerships, parts, servicing, etc., are accountant decisions all the way!!