Self Editor

Forum: pol
Page 3009
Subject: Minnesota car buyers "Bill of Rights"

Posted by: sarge33rd - [99331714] Thu, Dec 13, 2007, 17:53

OK, it had to happen. Following the CA legislation which took affect this past July, now Minnesota has one in the works.

I've provided alink to the legislation as it currently is written. I wonder, how many of you can/will look at it objectively, and see the honest and obvious results?

I've already prepared correspondance relative to the legislation, addressed to the bills author. I'll post a copy in a day or so.

I am interested, in what you have to say about the legislation, as consumers.

Minnesota car buyers "Bill of Rights", proposal

IMHO, if this legislation is passed as written, there will be NO, count them ZERO, new vehicle franchises in the entire state. The why behind that, when I post my letter to the author.

Tree
ID: 3311221317
Thu, Dec 13, 2007, 18:23

what, in particular, do you have issue with?

sarge33rd
ID: 99331714
Thu, Dec 13, 2007, 18:35

First...The credit reporting requirements. The legislation insulates the reporting agency by requiring the dealership to tell the consumer in writing, that the agency has no part in the credit decision. Yet the dealership, who also has no part in granting/denying credit, is required to explain the scoring system used by the reporting agency. The formulas used to determine the credit scores, are closely guarded secrets. Secrets, held BY the reporting agencies. We in the dealership do not KNOW, how they work. We dont know the maximum possible score, yet those dealerships in MN would be required to provide that information. Information we do not have access to, therefore cannot provide, therefore cannot be in compliance.

This legislation then requires the dealer to tell the consumer in writing, not to ask the reporting agency, but the dealership, why they were denied credit. Again, the dealership doesnt make that decision. The bank does, or the credit union, or the manufacturers finance arm. Federal law already requires that the one making the "adverse decision", tell the consumer in writing, why that decision was rendered. There is no way, none exists, for the dealership to comply with that part of the legislation.

That part Tree, is just one part of it that has more problems than I can shake a stick at. I'll give you a hint as to what part would kill new car franchises in MN though. My brother, quit selling cars in Minneapaolis, when for the 3rd time in one day, his "customers" went on a test drive and drove straight to the Mall of America, got out of the car and said "Thanks for the lift." Here's the simple truth that no one in retail wants to say out loud, but I will cause I dont care if I piss people off, 80% of those out buying cars? They lie to the dealers, they cheat, they fib on their credit applications and figure we wont find out. All the crap that dealers are accused of? The consumer does on a daily basis. IF we dealers did 10% of what we are accused of doing, we'd be in jail. Its that simple.

Perm Dude
ID: 4411431312
Thu, Dec 13, 2007, 18:49

is required to explain the scoring system used by the reporting agency

Not exactly. Just like a credit card (and other credit offering companies), they are required to tell the consumer the number, where they got it, and the basics of what it is. They are not required to say more. In fact, they don't know any more to tell.

And the denial of credit isn't coming from the credit reporting agency. It is coming from the dealer. The dealer might rely on the score, but it is the dealer who decides whether to offer the credit or not.

That all said, there is nothing I can see in the act which requires any of this if the credit is being obtained through a third-party (such as a bank). The reporting and other requirements only kick in when the "retail seller" is offering the credit (such as through a wholly-owned finance corp).

sarge33rd
ID: 99331714
Thu, Dec 13, 2007, 18:54

No PD...the dealer is NOT the one granting or denying credit. THAT, is an erroneous belief. The dealer submits the application to any number of lenders and THEY decide whther to grant or deny credit.

This legislation, as written, requires the dealership to disclose the possible range of scores. We dont have that information. I've been doing auto/motorcycle finance for 9 years. I dont know what the maximum score is for an Experian report, or an Equifax or a Trans-Union. I dont know if they are the same, or different. I do know, that the maximum score for a 24 yr old and a 45 yr old, are not the same. What the max range is for each age, I dont know. Nor does ANY dealership. The reporting agenicies know, but this legislation does not hold them accountable for disclosure. It holds the dealership accountable for disclosing data we do not have.

On a retail installment contract done at a dealership, the dealership IS the creditor, until the assignee physically accepts the contract. This ruling has been handed down by the courts, in decisions re the Adverse Action notification requirements. It is also why, any reputable dealership submits EVERY application to at least one lender. That way, the dealer is NOT making the decision, but the lender is.

Perm Dude
ID: 4411431312
Thu, Dec 13, 2007, 18:57

maybe you want to read the last paragraph I wrote before you respond, sarge.

sarge33rd
ID: 99331714
Thu, Dec 13, 2007, 19:08

I did read it, and you are mistaken.

I cannot copy/paste from an Adobe document, so I'll indicate the lines of text which apply:

2.26 through 2.35

state that the dealership must disclose the source of the score and the range of the score if used in connection with either a retail purchase or lease of a motor vehicle.

Lines 3.5 through 3.7, repeat the use of the phrase "in connection". Dealership finance personnel DO use the score in conjunction with other elements of the credit report, to determine whether or not a particular prospective buyer fits the general guidelines of particular lenders. Why? We have a "look to book" ratio requirement to maintain. That is, if I submit 50 applications to a specific lender, they require that I send them a specific per centage of those deals. If I dont, they can unilaterally terminate my dealer agreement with them, and I lose them as a financing source. Therefore, I decide not to send a 620 score to a lender with a 650 minimum requirement. I know they wont buy the deal, and it will hurt my "look to book" ratio. I'll still submit the application, but to a different lender.

Line 3.16 does say if oyu have questions about the score itself, to contact the agency. However it still requires the dealer to disclose the potential range of those scores.

Tree
ID: 3311221317
Thu, Dec 13, 2007, 20:19

My brother, quit selling cars in Minneapaolis, when for the 3rd time in one day, his "customers" went on a test drive and drove straight to the Mall of America, got out of the car and said "Thanks for the lift." Here's the simple truth that no one in retail wants to say out loud, but I will cause I dont care if I piss people off, 80% of those out buying cars? They lie to the dealers, they cheat, they fib on their credit applications and figure we wont find out. All the crap that dealers are accused of? The consumer does on a daily basis. IF we dealers did 10% of what we are accused of doing, we'd be in jail. Its that simple.

i have never heard of the former happening - and while i'm sure it does, the mere thought of it happening 3 times in one day has me laughing my ass off, because it's so sit-com like.

the latter, however, happened to me. i got screwed by a car dealer, so i've got no sympathy.

No PD...the dealer is NOT the one granting or denying credit. THAT, is an erroneous belief. The dealer submits the application to any number of lenders and THEY decide whther to grant or deny credit.

and your point is?

while you may not be the one denying the credit, you are acting as the emissary and communicator regarding the deal. you can't expect the consumer to contact the lender - that's your job.

sarge33rd
ID: 76442923
Thu, Dec 13, 2007, 20:24

Tree...The Patriot Act, Federal Privacy Laws, prohibit the lender from disclosing to other than the applicant, certain information. We dont freakin HAVE the information this legislation requires us to disclose. Every instance of non-compliance, is a lawsuit waiting to happen.

My point is Tree? Did you REALLY type that?

If I dont make the decision, if I have nothing to do WITH the decision, if I dont have the right to obtain the personnel information upon which the lender made its decision....how the fvck can I be legally bound to disclose to you...that very information?

Perm Dude
ID: 4411431312
Thu, Dec 13, 2007, 21:46

#6: Sarge, the beginning of that section:

A retail seller that obtains a credit reporting product known as a "credit score" from a consumer reporting agency, as defined in section 13C.001, subdivision 4, for use in connection with an application for credit initiated by a buyer for the purchase or lease of a motor vehicle shall provide, prior to the sale or lease of the motor vehicle, the following information to the buyer in at least tenpoint boldface type on a document separate from the sale or lease contract...

So a deal which (1) obtains a credit score for a buyer (2) in connection with a credit application must disclose the information, just as every other credit granting agency must. But if a dealer isn't getting the score, or is getting it but not in relation to a particular credit application, those rules don't apply.

Otherwise, they do. And those rules aren't as bad as you make them out to be. The possible range of scores is obtainable to anyone. Literally. Just go to the web site of the agency and I bet you'll find it within two minutes. The range of scores isn't a secret. What is a secret is how a particular score is calculate (and that isn't information you are required to give).

This isn't hard. Credit card companies, banks, department stores and so on do it thousands of times a day.

sarge33rd
ID: 76442923
Thu, Dec 13, 2007, 22:02

The actual range PD, varies by age of each consumer. And please, reread the part you quote above....IF a dealership so much as gets the score...we then have reporting obligations under this legislation. Obligations we cannot fulfill.

And no...CC companies do NOT disclose the particular range possibility for each and every consumer. No, banks dont either. Nor do department stores, or any other business.

And yes, it IS that big of a deal. The very nature of what I do, is to comply in such a way, as to shield my employer from civil litigation. THAT, is the primary function of my job. And yes, this legislation opens literally dozens of doors, for litigation.

rockafellerskank
Dude
ID: 27652109
Thu, Dec 13, 2007, 22:20

It's just the next step on the way to sell cars at Walmart for $1999.99 :)

sarge33rd
ID: 76442923
Thu, Dec 13, 2007, 22:21

At KEYSTONE mark-up, that would be roughly 40 times the profit margin your average automotive dealership operates under.

rockafellerskank
Dude
ID: 27652109
Thu, Dec 13, 2007, 22:25

Then why do some of the richest men I have ever met own car dealerships? I'm talking about multi-multi millionaires. i suspect they don't make it up on volume.

Tree
ID: 3311221317
Thu, Dec 13, 2007, 22:35

The actual range PD, varies by age of each consumer.

that's not true.

you can look up the ranges on line - whether they use FICO, VantageScore, or another system, all of these can be looked up.

the RANGE, is the same. the score may quite possibly take your age into account, but the range is the same - FICO, for example, ranges between 300 and 850.

at risk of sounding judgemental, i'm floored you don't know this. i'm floored you don't know the range of scores, and i'm even more floored that you seem to be overburdened by the simple task of using google to find out these ranges.

And yes, it IS that big of a deal. The very nature of what I do, is to comply in such a way, as to shield my employer from civil litigation. THAT, is the primary function of my job. And yes, this legislation opens literally dozens of doors, for litigation.

and here i thought the primary function of a car salesman was, to, well, ya know, sell cars.

sarge33rd
ID: 76442923
Thu, Dec 13, 2007, 22:44

The applicable range, for each and every individual...is different. It is not possible, for a 20 yr old to have the same high point to an achievable credit score as would be the case for a 45 yr old. And 850, is not the maximum score. And I'm not a car salesman. I'm an F&I Manager. The primary function of which, is to ensure that full compliance and total disclosure occurs, so that you the suit happy consumer along with your ambulance chasing lawyer, cant file a meaningful lawsuit against the dealership in which I work.

If I disclose to you, that your range potential is No Score through 720, and that top score is wrong...I am in violation of that legislation as it is currently written. (Assuming of course that I were in Minnesota.) Standing in violation, leaves my employer open to lawsuit. Even if the dealership wins the suit, it wont happen until after we have spent $25,000+.

And dealers, have been the subject of suit, over far less than that in the past.

sarge33rd
ID: 76442923
Thu, Dec 13, 2007, 22:46

Lets try another section:

3.24 through 3.32

sarge33rd
ID: 76442923
Thu, Dec 13, 2007, 23:15

one final word re credit scores Tree....When an auto dealer pulls your credit bureau or GMAC, or the bank when looking at your automobile credit application? They dont ask for, get, want or care...what the FICO score is. Its meaningless. They get your "Auto Adjusted Beacon" score. An entirely different number.

Perm Dude
ID: 4411431312
Thu, Dec 13, 2007, 23:23

CC companies do NOT disclose the particular range possibility for each and every consumer.

This quote is a typical "sarge reads more into it than there is, and talks about what a huge burden the thing is." The law doesn't require a personalized credit range to be given. Only, like an SAT score range, what the possible range can be from a particular reporting credit agency in general.

Sorry, buddy. I'm stepping out on this one. If you want to make a mountain out of a molehill, you are on your own.

Somehow, thousands of Minnesota companies which use credit scores in their credit-giving decisions manage to comply with the state's credit laws without much difficulty at all. Imagine that!

leggestand
ID: 2511401221
Thu, Dec 13, 2007, 23:34

I have bought two cars in the past three years, and the credit reporting hasn't been any different than what Minnesota is presenting in Section 3 - Credit Scores. I just don't see a problem...maybe one of our legal experts (MBJ, Zen?) could chime in and tell us any holes?

Personally, I have broken that section down line by line, and I can't see an issue that I'd be worried about if I owned a dealership or worked in a dealership. A synopsis of entire Section 3:

3a - If the retailer obtains a credit score, the retailer must provide the buyer (in 10 point font) the following on a separate form from the sale (pretty typical for credit scores to not be on the sale or lease contract, so, I don't see any issue with that):

1. Credit score and credit agency...This is standard procedure in any industry where money is changing hands, so, I don't see an issue here.

2. Range of possible credit scores established by the credit agency"...Sarge, I think you are making this issue more complex than it needs to be. The range is what the credit agency publishes, in Tree's example, it's 300 -850. That's all that is needed to be provided. Can someone bring a lawsuit against you? Maybe, but they would lose. I am going to drill this point down further, though...

Using your logic thus far, there is no such thing as a range. Whether or not you think a 20 year old can score as high as a 45 year old is irrelevant. We can take your 20 vs 45 year old further, though...a 20 year old with bad credit can score in X range, while a 20 year old with good credit can score in Y range. We can go even further than that, though...a 20 year that scores a 600, can only score a 600 from that agency, so, no range exists. This is the logic you are producing by saying "no range exists, because ranges differ for each individual." That's why I don't think the "I don't know the range argument" holds any water. The legislation says provide a range, it does not say provide a range for that specific individual; if that was the case, a range wouldn't have merit and wouldn't be mentioned.

3. A notice showing the name, address, and phone number of the agency must be provided. Almost any credit report provides these details, so, no big deal. Plus, the most important line in the "notice" is: "If you have questions about your credit score, please contact the agency at the address and phone number provided."

Seriously, I don't see the issue on this section of the legislation. Unless I hear otherwise from someone with legal experience, I don't see a problem when you break it down, like above.

sarge33rd
ID: 76442923
Thu, Dec 13, 2007, 23:42

I may not be a lawyer, but in 9 years of interpreting the application of law as it pertains to my job function, I have yet to be proven wrong.

The range is only meaningless, if it does not apply to that individual. Since no requirement would be placed for meaningless data, it can be reasonably assumed that the range disclosure requirement MUST be the applicable range for that individual.

I will mention too, that when you pull your own free credit report from each bureau and get a score. Do NOT rely on that score to have any meaning at all. It has precisely none. I have had customers come in, screaming about their quoted interest rate and waving their print out, showing a 720 score. Yet when we pull their auto-adjusted score...its a 584. The FICO, if thats even what the bureaus give on the free reports, is an utterly irrelevant number in auto lending.

sarge33rd
ID: 76442923
Thu, Dec 13, 2007, 23:53

re 13....they were wealthy to start with. It takes millions, to obtain an auto franchise. (Not necessarily straight up cash, but a credit line in the 8 figure range.) Logical exceptions wouwld be, where the dealership has been in the same family for years and years, and is now in maybe its 3rd or 4th generation of ownership/operation.

sarge33rd
ID: 76442923
Fri, Dec 14, 2007, 00:03

additional response to 13....at 2%-3% margins and $5,000,000 month in sales, that makes a lot of money. Of course, it also means the dealership is SPENDING approximately $4,900,000 month in inventory and operating costs.

weykool
Leader
ID: 41750315
Fri, Dec 14, 2007, 03:22

Sarge:

To compare a dealership to other business is apples and oranges.
A properly run dealership will pay for all of the overhead for the entire dealership through the parts and service departments.
The parts department is selling at keystone when you average retail/service/warranty and wholesale.
The service department is a different story.
It is very typical for a mechanic to be making 20-25 per hour and the dealership is billing the customer 100 per hour.
To make a profit all the sales department has to do is make sure there is gross profit on each and every car.
From there it is a percentage game.
The salesman/F&I mamager/Sales manager all make money based on a % of GP
Most manufactures have holdbacks and incentives that have a built in GP that the dealership earns on every car provided the dealership sells the car for at least invoice.
If the dealership decides to sell cars below invoice and the dealership loses money then perhaps that dealership should be closed.

As for the "requirements".
I think you are over reacting.
Do you really think the legislature would pass a law that nobody could comply with?
If you are correct in your assesment that you would be required to give information not available to you then how hard would it be for them to pass a law requiring the reporting agency to make the information available to the dealership?
Do you honestly believe that they will run all of the dealrships in the state out of business and force everyone from MN to travel to another state to buy a car and have all the tax revenue go to another state?
Please............

Tree
ID: 41132145
Fri, Dec 14, 2007, 06:38

The primary function of which, is to ensure that full compliance and total disclosure occurs, so that you the suit happy consumer along with your ambulance chasing lawyer, cant file a meaningful lawsuit against the dealership in which I work.

i read statements like this, and other things you've said, and i'm not sure you're in the right business. you sound downright miserable, and seem to have such contempt and disdain for your customers.

back to the law itself - i'm no lawyer, and i will admit to not understanding a lot of legal mumbo-jumbo, but to me, this appears to be a law to add a bit of transparency to a business that it notorious for having quite a bit of deception and slight of hand to it, and that may be your biggest problem with the law.

leggestand
ID: 2511401221
Fri, Dec 14, 2007, 07:50

The range is only meaningless, if it does not apply to that individual. Since no requirement would be placed for meaningless data, it can be reasonably assumed that the range disclosure requirement MUST be the applicable range for that individual.

Sarge, as I said earlier, there is no such thing as a range for an individual. You want to say that age determines the range, but that simply isn't true. Age may play a factor in your score, as do late payments, outstanding debt, defaults, etc, but it does not adjust the the general range. A blanket statement, like "a person can score between 300-850 from this agency covers you." Notice that you would say "a person," rather than "you can score between 300-850"...

This is for the sole reason that the "you" can only score one number. If my credit score is 650, then my credit score is 650...I have no range for myself, but I fell within the general range. Maybe I was knocked down some for my age, maybe I was knocked down some for a high loan balance out there, maybe I was knocked higher because I pay on time, but that's the effect of my final score. I just don't see the hole...

rockafellerskank
Dude
ID: 27652109
Fri, Dec 14, 2007, 08:39

Re: 21/22:

Why do such wealthy guys invest in such crappy businesses (2-3% return) when they could do better with their money? Me thinks they are making more than those margins, else the investment capital would flow to other business ventures. I have no expertise here, just seems like common sense?

Sorry to divert the thread.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 10:18

OK...I'm going to explain why you are wrong, and then why I oppose this requirement, and then we are going to move on to the next section. You can believe what I say, or dont. It really makes no difference. The fact is, if I am out of compliance with any given individual, that individual can file suit.

A 19 yr old, does not have the same range as a 45 yr old. Thats a simple fact. A 19 yr old, cannot score 850. As soon as I give someone a range which is innacurate FOR THEM, I am out of complaince and can be sued. Think about it....I tell a 20 yr old that his range is XXX. Helater finds out, the max he could possibly score, is 75 points less than I indicated as a maximum. Do you REALLY believe, there isnt a single lawyer out there, who would file claiming that we caused his client "mental duress and anguish"? (Remember, McDonalds got sued 'cause their coffee was too hot.)

When a consumer fills out a credit application, the dealership does NOT have approving/denying authority for that loan request. We submit ALL applications to at least one lender. This way, if the consumer is denied, the lender (the entity who made the decision), is already required by Federal Law, to sent out what is called an "Adverse Action Letter". This letters contents are defined by Federal law, and must include the decision, the source of the data which led to the decision and consumer contact information for that source. A dealership selling 200 cars/month, will talk with approx 1,000 prospective customers/month. This legislation, will duplicate that requirement, BUT place the additional burden on the delaership of maintaining an additional 750 files every month, for 2 years. Why 2 years? Thats generally, the statute of limitations for filing a civil action. The only means a dealer has of proving they complied, is to have a copy. So, this legislation makes it necessary for the dealership to retain ALL papers related to even unsuccesful sales, for 2 years. The dealership F&I people, already work from 8am until 9 or 10 pm, 6 days/wk. This burden of 750 additional files/month, duplicates what is already being done, and will cost the dealership money in lost sales while complying with this requirement, (time/timing is often critical in sales), it will cost the dealership money in additional paperwork and in additional storage and will extend the work hours of those tasked with that compliance. Are you prepared to pay more for a car, to offset these additional costs? Every dealership within 25 miles of another states borders in Minn, will either have to "eat" those very real costs, or see their customers drive across state lines and buy the car for less at another dealership where these requirements do not exist and the dealer is not incurring those costs.

Tree...I love what I do and I am very, VERY good at it. I rank nationally, in the top 5-10%, month in and month out. The fact is, doing my job, requires that I look at it from the stand point of "How do I sue the dealer?", and then I have to institute policies and procedures to defeat the answer to that question. You say this business is "notorious" for sleight of hand. I tell you, though you refuse to hear me, that such has not been true, for 20 plus years. Are there still some unscrupulous dealers out there? Of course there are. Like in any business where the number of businesses exceeds two, you will find some who do it well and some who do it shady. I've worked for one shady dealer and it only took me 4 months to gather proof of what I suspected. Once I had proof, I walked in, quit and walked away. Thats the only time in my professional career, I have quit w/o notice. When I came to Killeen almost 2 years ago, it was because I had been recruited by a fella I used to work for, to head up the F&I Dept for an Independent Used Car lot who wanted to go "big time". After 3 weeks, with my fighting them daily over compliance issues, they re4alized that I would insist on doing things "right". I was terminated. *shrug* No loss to me, as my professional pride and dignity are worth more to me than a paycheck. A HUGE number of dealers across the country, have begun digitally recording the entire F&I Delivery process. Every month in trade publications, I read of dealerships with a customer coming in with their Atty in tow...Your guy never told me about this being on the note blah, blah, blah...Then when the recorded process is brought out, and the 15 minute discussion the Finance Manager and the customer had on that very topic is shown to the consumer and their Atty, the whole thing goes away like a puff of smoke. Tree, you said earlier you had been "screwed" by a car dealer. Maybe so, I'd prefer not to dispute that claim. BUT, if I had a dollar for every customer over the past 9 years who told me that, when in fact the dealer in question had done EXACTLY what the customer wanted...I'd be retired.

Now.....accept what I said about why I contest that section or dont. Lets move on to the section I mentioned in my post nr 16.

Lines 3.24 through 3.32

Read it CAREFULLY, and see if you can figure out the problem there.

weykool
Leader
ID: 41750315
Fri, Dec 14, 2007, 11:01

I dont see where you are coming up with the "range for that individual".
It says:
(2) the range of possible credit scores established by the credit reporting agency that provided the credit score;
I'm no english major here but I dont see the phrase "for that individual"
If the credit reporting agency uses a range of 300-850 then that is the range.

As for requiring a written offer on a trade in?
It seems there is the same requirement when you buy and sell a house and this monumental burden hasnt killed the real estate market.
But we await your doomsday scenario.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 11:04

raed it again, with an eye toward "How can I file suit against the dealer over this?"

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 11:08

raed = read = I cant type. :(

leggestand
Leader
ID: 451036518
Fri, Dec 14, 2007, 11:10

Sarge - I don't believe you can't see my point...so, I am moving on. No one agrees with you, so, that should tell you something. The key you are (purposely?) missing is general vs individual. And a law would not be passed for something that doesn't exist. Again, you are alone on this one, and that should give you an idea that you are likely off base.

Now.....accept what I said about why I contest that section or dont. Lets move on to the section I mentioned in my post nr 16.

Lines 3.24 through 3.32

Why would anyone respond to this request? If we move onto the next section, all you are going to say is accept what I said or don't. What's the point of debating it, if you have a decision already made?

I for one will not be wasting my breath on any more sections considering that it's pointless if you already are 100% sure of the right answer because you haven't been wrong in 9 years.

leggestand
Leader
ID: 451036518
Fri, Dec 14, 2007, 11:11

Read it CAREFULLY, and see if you can figure out the problem there.

Lol, I just caught that from 27. Considering I couldn't find the made up problem in the previous section, I doubt I'll find it there either.

leggestand
Leader
ID: 451036518
Fri, Dec 14, 2007, 11:17

raed it again, with an eye toward "How can I file suit against the dealer over this?"

Frivelous lawsuits are filed on a daily basis. As I said earler, could someone potentially bring a suit because of the law? Sure, people always can. I just don't think there is a chance that they would win, which is really the issue you should be worried about.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 11:19

No, I am not alone. The Minn Auto Dealers Assoc Legal dept agrees with me 100%. Those who dont agree, are those with no knowledge/experience in the industry. Move on.

Myboyjack
ID: 131159149
Fri, Dec 14, 2007, 11:52

sarge - Post #1: I am interested, in what you have to say about the legislation, as consumers.

sarge - Post #34 Those who dont agree, are those with no knowledge/experience in the industry. Move on.

LOL

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 11:52

and FTR leg...dealerships dont win lawsuits. We lose if it gets that far. Even when we win in court, we lose via the bad press/publicity and the cost of defending ourselves. It's my job, to do everything possible, to remove the threat of a lawsuit.

btw..The Iowa Auto Dealers Assoc Legal dept and the Texas Auto Dealers Assoc Legal Depts, also agree with my interpretation. As do the the VPs of more than a few Credit Unions, Banks, FMCC and GMAC. So excuse me, if I accept their endorsement over your protestations.

leggestand
Leader
ID: 451036518
Fri, Dec 14, 2007, 12:04

That's fine, Sarge. But don't ask for opinions on something if you already have decided your final answer. What's the point of that? Were you just looking for everyone to come in here and say, "Sarge, you are right! This is an outrage!"

Well, so far you are alone in this thread, so, I will say I agree with EVERYONE in this thread...except Sarge.

MBJ - great post in 35, I'd love to hear your thoughts on that also, Sarge?

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 12:10

By "move on", I was referring to the next section. It had become apparent, that what "you" had to say, is not consistent with what exists as my daily reality in the business.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 12:18

The problem with the next section, is not what it requires...but what it specifically prohibits.

Tree
ID: 3533298
Fri, Dec 14, 2007, 13:30

why does this thread even exist?

it's not at all a "what do you think about this?" thread, but rather a "Sarge wants to bitch about a law he thinks is unfair thread."

A 19 yr old, does not have the same range as a 45 yr old. Thats a simple fact.

is it? a 19-year old heir, say, of the Hilton family, isn't going to have a higher credit score than, say, a 38-year-old member of the Tree family?

the range is EXACTLY the same, no matter your age, or anything else. but when you start factoring in age, credit history, outstanding this, etc etc, then the top possible score for that individual changes - but that's an individual.

however, before anything else is factored in, all things are equal, and someone working in a credit department not grasping this is astonishing.

You say this business is "notorious" for sleight of hand. I tell you, though you refuse to hear me, that such has not been true, for 20 plus years.

i remember my first car shopping experience, a bit less than 15 years ago. i remember the dealer itemizing the costs to me, and one of them was "advertising expenses".

well screw you, that's the cost of doing business. i'm not paying for your advertising.

i also test drove a car. i loved it. the salesman made a big deal that he would honor the price quoted, but only for this car. over and over he said, "only for this car".

we signed the papers. i went a few days later to pick up my car, and suddenly it's "oh, we didn't realize there was an air conditioner in the car, so now the price is slightly higher."

car dealers have earned their reputations.

weykool
ID: 2842717
Fri, Dec 14, 2007, 13:53

I would agree with Sarge that IF dealerships are required to provide information that they do not have access to then the law is absurd.
It seems the problem here is what exactly will the requirements of the law be.
I am sure the MN auto dealers lobby will be able to have the regs. written in such a way that will allow them to be in compliance with the law.
If not, then maybe there should not be any auto dealers in MN.

Your Honor:
The defense will stipulate that if the law requires an "individual range" then it is absurd if the prosecution will also stipulate that if the law requires a general range then the law is acceptable.
What says the prosecution?

Still waiting on what is wrong with wanting to have the offer in writing.
When buying and selling non-realestate property if you can prove a verbal offer in a court of law it is just as binding as a written offer so I dont see the problem with a law that requires a written offer.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 13:56

I'm truly dismayed, that the hatred/loathing for the auto retail industry is so deeply ingrained; even those I consider to be intelligent people are unable to see past their own prejudices and hatreds to recognize the truth.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 14:05

weykool, there is nothing wrong with wanting the trade offer in writing. The problem with the legislation as written, is in the first sentence lines 3.26 through 3.30, where it says the dealer may not respond in ANY way other than a written offer.

You're the customer on the lot, and you mention trade. That salesman can NOT say a single word. To do so, is to respond in some fashion other than, a written offer.

Lines 4.3 and 4,4, preclude the dealership from even TALKING about what your trade might be worth. Literally, according to the letter of the law as written, the dealership can not say a single word. Only, hand you a written offer.

Perm Dude
ID: 2211501412
Fri, Dec 14, 2007, 14:28

I think we can all safely say that, as consumers, we don't share your concerns, sarge.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 14:35

Only PD, because you're not looking for an excuse to file a lawsuit. Those that are, this legislation will hand it to them on a silver platter.

Pancho Villa
ID: 495272016
Fri, Dec 14, 2007, 14:36

Literally, according to the letter of the law as written, the dealership can not say a single word. Only, hand you a written offer.

That's funny. When I bought my current car two years ago, I had about three meetings with the salesman, including test drives of different cars and discussions of price. When I decided what I wanted, I called him and said I wanted the out-the-door price.
He called me back with the price and I showed up the next day with a cashier's check for the amount(My former car had been crashed into, so I had cash from the insurance settlement).

There was nothing in writing until I picked up the car. It was a good experience.

Balrog
Dude
ID: 02856618
Fri, Dec 14, 2007, 14:40

RE: 44
My last trade-in they told me they'd give me $X towards the purchase. Then while we're filling out the paperwork, oops! "Did you know your transfer case is totally destroyed? We're going to have to take $750 off our earlier offer." Needless to say, there was nothing wrong with the case other than a slight bit of oil leaking around the gasket. No sale. I know if they tried to do that to someone like my wife or my grandma, she'd just go along with it not knowing any better and the dealer would skim off an extra $750. That must happen a lot for MN to what to codify to prevent it.

I've had at least two other incidents in buying four cars over the last few years where the salespeople outright lied to me. I may be prejudiced against car salesmen, but it's based on experience, not hearsay.

weykool
ID: 2842717
Fri, Dec 14, 2007, 14:45

I've worked for one shady dealer and it only took me 4 months to gather proof of what I suspected. Once I had proof, I walked in, quit and walked away. Thats the only time in my professional career, I have quit w/o notice. When I came to Killeen almost 2 years ago, it was because I had been recruited by a fella I used to work for, to head up the F&I Dept for an Independent Used Car lot who wanted to go "big time". After 3 weeks, with my fighting them daily over compliance issues, they re4alized that I would insist on doing things "right". I was terminated.

So you quit one "shady dealer" and you were fired from another "shady dealer".
Just so we can get a feel for how many shady dealers there are....how many dealers have you worked for?

I'm sure there are a fair number of dealers who are mostly honest but it seems the reputation that dealers have is rightfully earned.
My guess is that you have also had to deal with an owner who gave you a pay plan with incenctive and you worked your butt off to make those incentives only to heve the owner come up with a "new and improved" pay plan.
Why only screw the customer when there are loyal employees that are available to be screwed as well?

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 14:57

I've worked for:

A Chevy-Olds-Caddy-Toyota dealer (2 yrs)

A Ford-Linc-Merc Dealer (6 months)

Chevy-Chrysler-Jeep Dealer (4 months and quit)

Another Ford dealer (3 months under contract)

Another Ford-Linc-Merc dealer (6 months...right after 9/11 and sales were less than 1/2 what I was told they'd be, thus my check was less than half what I expected.)

Honda-Buick dealer (1 1/2 years and let go when I questioned the pay.)

Tried to run an Independent F&I Office for a year. (Independent dealers by and large have ZERO interest in complying with the laws. An experience to be later confirmed for me.)

Ford dealer (1 1/2 years)

Indep Dealer (3 weeks)

Honda-Suzuki-Polaris Motorcycle dealership (1 1/2 years now and I see no reason to think I wont retire from here.)

Again...are there shady dealerships out there? Of course there are and I've never denied that. The vast majority however, operate in entirely above-board fashion. Those who are shady...you know who they are in your area. You know it full well. You've heard it over and over again from people who have shopped there in the past. If you choose to go there, knowing how they operate...thats on you. Stay away from them, and they'll dry up and blow away.

Here's no small part of the problem...the honest dealer? Charges more. He pays his people better, he treats his customers better. And they pay for that. You insist on saving $50 on that car deal? Then go ahead and save it. Just dont complain when you get less customer service from "them", than you would have "here". We all "get what we pay for", to a greater or lesser degree. Car buyers, are no different.

DWetzel from work
ID: 3316412
Fri, Dec 14, 2007, 15:01

Re: 44... I hate to go all Clinton on you sarge, but it depends on what the definition of the word "respond" is. I am not a lawyer, but I am real estate agent, where many of the same principles would likely apply.

In responding (in the formal, and probably legal sense) to an offer, you can do one of three things:

1. You can say yes.
2. You can say no.
3. You can make a counteroffer, which is, essentially, a "no, but I'll do this".
(You can also ignore the offer and let it go away, of course.)

Now, it seems rather silly to have to have the car dealer say no to an offer in writing, but I suspect that isn't the intent of the legislation, and if anyone were sued over that I am certain they would be laughed out of court.

If the dealer says yes, there ought to be some sort of written contract in place; I think we would all agree to that. Really, this protects all parties.

Now, if he wants to make a counteroffer, which is where most of the problems will be, that probably also ought to be in writing to prevent confusion.

Note that saying things like "well, I don't know, your transfer case is busted" or "I paid $500 less for a car just like this a week ago" or "Are you out of your mind, you blithering idiot?" or just a big hearty laugh are not, in the formal sense, a response to the offer, because it would say neither "yes", "no", or "no, but" (because there is no "but" repacing the original offer).

I'm reading this at work, so I admit I haven't read the full legislation, but that'd be my sense of it.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 15:06

But DW, lines 4.3 and 4.4 prohibit the seller or the sellers agent (salesman/sales manager) from DISCUSSING the trade value or what it might be.

it reads:

No seller or seller's agent may communicate to a retail buyer an estimate of the value of a vehicle to be traded in or make an oral offer.

This legislation prohibits the dealerships personnel from even TALKING about a trade allowance. The ONLY response allowed, is a written offer. Period.

DWetzel from work
ID: 3316412
Fri, Dec 14, 2007, 15:11

I think that if you look at the four statements above, in only one of those could I even come anywhere close to being construed as having provided an estimate of the value of a vehicle.

As for not making an oral offer? Possibly a bit over the top. I suspect that, as in most things, the less than honest dealers have ruined it for the rest of you.

At any rate, I fail to see how requiring offers to be in writing is a major burden on anyone. (Having bought exactly zero cars in a dealership in my lifetime, and I'm about to be 34 years old, I admit to ignorance: but on a car sales contract I assume there is a line for "trade in allowance for previous vehicle" or something similar? If so, there should be no problem in drawing up that contract. If not, there should be. And if the dealer isn't willing to put that in writing, I think that SHOULD raise some red flags.

Balrog
Dude
ID: 02856618
Fri, Dec 14, 2007, 15:29

Looks like this was already signed into law and goes into effect Jan 1. linky

weykool
ID: 2842717
Fri, Dec 14, 2007, 15:47

Seems to me that not being able to talk about the value of a trade in is odd.
How would you arive at a "meeting of the minds" as any deal requires.
Maybe the dealer just isnt allowed to say "trade-in" or "vehicle".

Customer: How much do you think I could get for my trade?
Salesman: I'm sorry I'm not familiar with that term.
Customer: My vehicle....the one I drove up in parked in front of the dealership right over there.
Salesman: Your what? Oh..... you are looking to exchange your "banana" with us as part of your new car purchase?
As you can see in our ad we buy and accept in exchange all bananas running or not.
In your case my manager says we could give you $5000 for your 1996 red chevy "banana".

leggestand
Leader
ID: 451036518
Fri, Dec 14, 2007, 15:48

LOL!

Balrog
Dude
ID: 02856618
Fri, Dec 14, 2007, 16:11

Probably beating a dead horse, but here's an F&I forum (sarge's profession) discussion on the BOR and they seem to like the new law except for the buy-back part which was removed from final legislation: link

The only ones on the net I can find complaining about it (other than sarge) are extreme consumer groups claiming it benefits dealers more than consumers: link

Meanwhile, sarge just realized he has about two weeks to draw up the forms and new procedures before the 1st. :)

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 17:08

LOL No Balrog...they do NOT like it. JimD on that forum...is me.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 17:11

what they are responding favorably to, is my post of 12/13 on pg 3 of that thread.

DWetzel from work
ID: 3316412
Fri, Dec 14, 2007, 17:26

One thing I'd point out is that in being required to disclose your profit from assigning a loan to a specific bank (which appears to be what that is asking), this is being brought in line with what is required of the real estate industry and of the student loan industry (wherein colleges were being paid to refer loans to specific companies).

It's a fairly standard consumer protection at this point. The idea is that if you, as a seller or seller's agent, are referring a customer to a company (be it a loan company, home inspection service, title company, whatever), it's generally assumed that you ought to be acting in the customer's best interest as far as generating the best rate, etc. Disclosing the payment you receive from those entities allows the customer to be aware of possible conflicts of interest.

Balrog
Dude
ID: 02856618
Fri, Dec 14, 2007, 17:28

I actually wondered if that was you (Jim D seemed so angry :>)!

Since the forum spent so much time on the "Buyers are Liars" topic, I assumed that the "Right to Cancel" bit was the big issue.

I won't go into what the "Buyers are Liars" stuff implies to those of us not in the industry, but kudos to you for fessing up.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 17:42

I know full well what it implies to the rest of you. That however, does not change the truth of the sentiment.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 17:47

bear in mind Balrog...Tree thinks its funny as hell, that some piss ants came into the dealership and wasted 7 hours of my brothers time on a Saturday, driving to the Mall oif America and getting out of the car. Given that attitude, I think I can be forgiven for not having much compassion for his less than thrilling experience at a dealership.

Balrog
Dude
ID: 02856618
Fri, Dec 14, 2007, 17:47

I don't disagree with you. I just find it ironic that you seemed shocked earlier that us consumers had a general impression that many car salesmen may not be the most honest people and consumers might need protection:

From 43:
sarge33rd: I'm truly dismayed, that the hatred/loathing for the auto retail industry is so deeply ingrained

Yet you seem to fully embrace the generalization that "Buyers are Liars" and the dealers need protection from us!

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 17:55

That Balrog, comes from doing this for 9 years.

Just watch...the price of cars in MN WILL go up. They have to. The nr of dealerships will decline. Smaller dealers, running 60/m or less...will bow out. The costs of this legislation, will exceed their financial capacity to comply. The number of MN dealerships near the MN/Dakotas, MN/IA or MN/WI borders will diminsh hugely. This is one seriously flawed piece of legislation. It accomplishes one thing, and one thing only....it creates any number of reasons to file what are truly frivoulous lawsuits, but against which dealers will have to spend hundreds of thousands dollars defending themselves. SOMEONE, has to pay those legal bills. Any bets its those who buy cars?

Balrog
Dude
ID: 02856618
Fri, Dec 14, 2007, 18:03

OK, but I've been a consulting engineer for nearly 30 years. There have been many times when potential clients have jerked me around, enticing me and my colleagues into spending hours, if not days, on a potential sale. Then they take the proposal we spent so much time on and use it as a basis to bid out a contract to someone else. It's part of the business to determine who's serious and who's going to screw you. I don't need/want legislation to prevent that.

bibA
ID: 3811101020
Fri, Dec 14, 2007, 18:04

Sarge - I must say that it appears that you feel EVERYONE is against you. Those in this forum, consumers in general, and now those in the legislative branch, who are apparently attempting to enact a law that would drive your industry out of business. Do you honestly feel that these legislators have it in for you for no good reason, out of spite, are evil, or maybe are just dumb? Some other reason?

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 18:19

Not disputing that in the least.

PA for ex, its not legally enforceable for a dealer to "spot" deliver a veh and then call it back in when they cant get the deal financed. The dealership is on the hook to hold the note in that case, in that state.

Customer comes in and fills out a credit app with Chase. The dealership submits the app, and Chase buys the deal. They deliver the car. Chase then learns, that the income was "fudged" on the app. NOT by the dealership, but by the customer when they filled it out. Chase bounces the contract and makes the dealer reimburse them for all payments made the dealership by Chase. PA law says the DEALERSHIP now has to hold that note. Oh sure, the dealership could file suit against the customer. Any guesses how that would play out in the press?

Credit challanged consumer comes in to buy a car. The dealership on these types of people, have to pay as much as 27% of the amount borrowed, TO the lender for writing the loan! Worse yet? We're not allowed by Federal or State Laws, to tell the customer about those charges, nor are we allowed to line item charge those fees to the consumer. So, on a 15k loan, the dealership would only get $10,950 from that lender. Out of that, they pay the taxes etc. The consumer though, is paying back a 15k loan. Somehow, the dealership is made out by every one of the 50 Atty Gens, to be the bad guy in those scenarios. Nevermind, the customer is the one who "screwed the pooch" vis-a-vis their credit. Nevermind its the lender charging the fees. The Atty Gens expect the dealerships to simply eat those charges. Guess what? Aint gonna happen. Those people, are the ones who have to come up with 5k down to buy a car. Then, we charge them 17k for that 12k car. After adding TT&L, and subtracting the 5k, maybe the loan is now for $13,5. Lender sends us 9855, plus we have the 5k down, so now out of the 14855, we can pay the taxes and still make a profit. Then of course, that customer is the one crying on the internet about how such-n-such dealership screwed them by charging them 17k for a 12 thousand dollar car. Sorry pal, it wasnt us who screwed you. You did that, when you didnt pay your VISA, or your utility bill, or any of the 7 bounced checks that show on your credit report as unpaid collections. Hell, I've seen credit reports with newspaper subscriptions in collection status.

And no, its not always the consumers fault. In some cases, bad things have happened to good people and we know that full well. 3 of the dealerships I've worked in, would bend over backwards to genuinely help that particular customer. I've seen DPs (Dealer Principles) call FMCC and TELL them they would do this deal as a standard loan despite the customers credit score. I've seen DPs sign recourse (essentially cosign the note), to help those kinds of people. But the jagoffs who come in and DEMAND stuff??? Get out of here...aint gonna happen.

And the we get legislation like this. With requirements we cannot meet. Just tells the consumer...dont worry. Go to the dealership and one of those people is bound to screw up. Then you can just sue them and get the car for free.

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 18:20

re 67...Its politically expediant bibA. Its easy and its popular, to blame the "big bad car dealers".

Balrog
Dude
ID: 02856618
Fri, Dec 14, 2007, 18:29

Sarge, don't dealerships have liability insurance to cover such things?

Perm Dude
ID: 2211501412
Fri, Dec 14, 2007, 19:04

big bad car dealers

ROLF! Those same dealers who, by sarge's admission, sometimes break the law. But we mustn't pass laws protecting consumers against these dealers. Oh no! They might actually go out of business.

Lets see how MN car dealers fare under a law designed to protect consumers of their products. My guess is that sarge's fears are entirely unjustified and overblown.

And sarge: Don't ask for our opinions strictly so that you can argue with us how wrong we are to not agree with your opinion on this matter. It makes you look petty and argumenative.

pd

sarge33rd
ID: 99331714
Fri, Dec 14, 2007, 19:08

RE 70: Liability doesnt cover such an occurance.

re 71: PD, I asked...because I really thought some of you could/would read between the lines. Like I said abive, I'm more than a little dismayed, that the overriding loathing of car dealerships, blinds even intelligent people to the truth of badly written legislation.

Balrog
Dude
ID: 02856618
Fri, Dec 14, 2007, 20:59

When I lived in NM, lots of people would drive to El Paso to buy cars because the TX taxes were several hundred dollars cheaper. Nevertheless, there were lots of thriving dealerships in Hobbs and Clovis and Las Cruces. I think the MN dealers will be just fine.

Myboyjack
ID: 8216923
Fri, Dec 14, 2007, 21:04

Balrog - I used to live in Hobbs and then Lovington (Yarbro Elementary School)

Balrog
Dude
ID: 02856618
Fri, Dec 14, 2007, 21:12

Carlsbad for 15 long years. Still go down for business once in a while.

Actually, Carlsbad was OK, but metro Denver has a little more to do.

Myboyjack
ID: 8216923
Fri, Dec 14, 2007, 21:36

Carlsbad Caverns and all those bats: one of my first memories. Cool.

Now back to the regularly scheduled program.

chode
ID: 3811561420
Fri, Dec 14, 2007, 22:09

Priceless thread. File under Exhibit A: sarge is an incorrigible dunderhead.

Go get 'em, Jim! Thanks for the entertainment value.

sarge33rd
ID: 76442923
Fri, Dec 14, 2007, 23:02

chode...you have yet to say anything intelligent.

Tree, in LA
ID: 2311401512
Sat, Dec 15, 2007, 13:45

Sarge - post 72 says it all, and shows an incredible amount of hubris on your part.

while many of us have had bad experience with car dealers (which, in itself, should say a lot),that has little to do with the interpretation of this legislation. it has a LOT to do with the opinion of the consumer that dealings should be transparent, and not at all hidden and in the shadows - regardless of the business.

for someone who has a lot of distrust and lack of faith in most things, you have a lot of trust and faith for your own dealings - you shouldn't be concerned that it's so transparent if you truly believe in it.

sarge33rd
ID: 99331714
Sat, Dec 15, 2007, 13:51

Transparency is not the issue here Tree. Compliance is. I do comply, toitally and fully. The way this is written however, compliance IS NOT POSSIBLE.

This legislation for one, prohibits the dealershipo from even TALKING about a trade allowance. It specifically says that we can NOT orally discuss it. So Tree, you tell me...how the hell do we conduct sales business, when we are prohibited from talking?

ALL this legislation does, is set the dealer up for a lawsuit, because compliance is not possible.

Perm Dude
ID: 81139157
Sat, Dec 15, 2007, 14:06

That is designed to protect the dealer as well as the consumer. If a salesman says "I'm sure we can give you $3000 on your trade in" and the dealer mechanic comes back with $2000, guess what amount the customer will ask in their lawsuit?

No one is preventing you from talking. The legislation prevents a saleman from pulling out numbers from his ass to make the sale.

"ALL" is a word you should refrain from using, unless prefaced by the fact that it is merely your opinion on the matter.

sarge33rd
ID: 99331714
Sat, Dec 15, 2007, 14:09

Perhaps PD, you need to reread that section of the legislation. It specifically bans ANY response other than a written offer AND it goes on to say oral discussion of possible trade allowances are prohibited.

It's not just my opinion. Its the opinion of various State Auto Dealer Association legal departments. Its the opinion of variuous Bank VPs. It's the opinion of everyone I have spoken with about it, who know this industry. Maybe you need to accept, that sometimes the "car guy" is right.

Perm Dude
ID: 81139157
Sat, Dec 15, 2007, 14:19

I read it, sarge. Probably closer than you did. I merely disagree with your interpretation. Nothing I posted about the section is at odds with your #82. Nothing. In fact, I posted a "for instance" in which the legislation would be of benefit to the dealership, by disallowing oral quotes on trade in amounts. Maybe you should re-read my post more carefully. Or maybe you shoud get out of the defensive crouch you've maintained throughout this thread.

Don't be a dick on this. You ask for our opinions, then try to climb on top that we don't "know this industry." Maybe we do, but want it changed.

Now, maybe you think everyone else in this thread are idiots. Your response would seem to indicate this--maybe you think the louder you wave your bona fides around the more likely it is that we'll just say "Yes sarge. You're right and we agree with your righteous anger"? But after looking through the responses, I see no one else agreeing with you. Not one. I guess we're all clueless idiots who need to be schooled on the industry, eh?

Or maybe we're not idiots at all. Or maybe I should wave my own legal background as a means to to try to slap you around that your interpretation of a law is wrong? No, that would be "pulling a sarge" wouldn't it?

sarge33rd
ID: 99331714
Sat, Dec 15, 2007, 14:54

No PD...my interpretation isnt wrong. SOmetimes my friend, sometimes...the seemingly stubborn and apparently "out numbered" one...is correct. This...is one of those times.

C.SuperFreak
ID: 4410333022
Sat, Dec 15, 2007, 18:41

Hey Sarge quick question. Are you allowed to sell new vehicles to us Cdns?

sarge33rd
ID: 76442923
Sat, Dec 15, 2007, 19:49

I can sell it to you. Whether YOU can import it or not...is a question beyond my expertise. I can however, put you in touch with some solid people near the Cdn border, who have experience with this. (Due to the recent devaluations of the dollar and the fact that a Canuckian buck, is now worth a buck.)

DealerCompliance
ID: 351123160
Sun, Dec 16, 2007, 12:44

I found this forum while researching this new law. FYI: Here is the final version that was passed, signed and goes into effect Jan. 1.
final version

A lot of the more restrictive sections (that are being debated here) were removed but I can see sarge33rd's point about being too restrictive and would result in an inability to comply.

The reason for any consumer protection legislation is the inability for one area of commerce to self-police. Have some car dealers acted incorrigibly in the past? Yes. Do most? No. Have previous laws had a positive impact on driving out the ‘bad apples’? Yes. Have they also created more work, tighter restrictions on legitimate dealers? Yes. They have also created a host of new angles in which plaintiff attorneys can create a lawsuit.

The CA Car Buyer’s Bill of Rights is the model in which all states are using for their own bills. While there is good protection within this law, it is also regulation of free enterprise and it has sub-segmented the retail automotive industry and left other similarly functioning industries to operate without the same restrictions as car dealers.

What about the furniture/electronic/appliance/jewelry industries? These also have credit arrangement functionality (mostly store branded revolving accounts underwritten by outside banks) but, under the MN law, they are not required to issue ‘consumer report disclosures’ or any of the other restrictions now placed on auto dealers. At the basic level, all of these operate like an auto dealer. They sell products to consumers and, if the consumer does not have the money for a cash transaction, they have relationships with banks to arrange for the submission of credit applications for a credit decision from the bank. Furniture, electronic and appliance stores also sell insurance protection that extends coverage after the expiration of the manufacturer’s warranty period, just like an auto dealer does. Again, these are not regulated as much as auto dealers. Personally, I’d like to know how much the retailers are contributing to the ‘zero interest, zero payment for xxx months’ charge card programs. If they are buying down the rate (which they are), I’d rather have that cash discount upfront. Not only are we not allowed to arrange that, they are not regulated to disclose the amount.

I’m happy the more absurd parts of the bill were stricken but it still threatens an open commerce system and would create situations that would be detrimental to both consumers and retails if followed with 100% compliance. I’m speaking mostly of the trade-in valuation offer. However, there is a difference between disclosure and over-regulation. Car dealers operate on lower profit margins than other retail industries and everyone negotiates the price of the car down to a minimal profit so the dealer has to 1)increase volume to make money and 2)find other products/services to sell in order to make money. With more disclosure, it will give consumers another avenue to negotiate in order to further erode the dealer’s profit. What’s next…the parts/service dept.? The actual disclosure of the cost of the part vs. what they charged? The labor rate paid to the mechanics vs. what was charged? It’s lunacy! Do you think the ‘Geek Squad’ from Best Buy make anywhere near the $80/hr. they charge? No way! I’d like to see other retail industries operate on the thin margins auto dealers realize.

From what I’ve read in the posts, there seems to be a lively discussion about several of these topics so I’ll check back often and see what I can contribute.

sarge33rd
ID: 76442923
Mon, Dec 17, 2007, 21:30

Reading the act as passed;

There is "nothing new" there. No added requirements beyond what many responsible dealerships have been doing for the past 10+ years at any rate.

Please note: The requirements for disclosure, were transferred from the dealer (where it didnt belong) to the lender (as per already existing federal law). The only "issue" I have with the section as passed, is is Sec 5(2)"

(2) the retail seller shall provide, prior to the sale or lease of the motor vehicle the
following notice in at least ten-point boldface type on a document separate from the sale
or lease contract, which must also include the name, address, and telephone number of
four principal consumer reporting agencies...

Why 4? There are 3 which are commonly used, and even those are geographic in where each has its greatest "sphere" of influence. Equifax, Trans-Union and Experian. There are some locales with a localized credit reporting agency; but I have never worked in even a small town dealership that made use of those.

The "restrictive" defining over the use of the term "certified", is also nothing new. Pretty standard and for the most part, already in place via manufacturer/dealer agreements. (IOW, violate that dealer agreement, and you get to lose your franchise. Not many I know of, are that eager to sell a car as to run that risk.)

I also note, the time limit for filing a suit re a warranty issues, is cut to one year vs two.

Forgive me for feeling more than a little vindicated. It would appear, as though every issue I raised, was stricken from the passed legislation. Maybe, I wasnt so far off after-all?

katietx
ID: 4911141721
Mon, Dec 17, 2007, 22:39

And no...CC companies do NOT disclose the particular range possibility for each and every consumer. No, banks dont either. Nor do department stores, or any other business.

Sorry about the late entry into this particular thread (been moving once again - this time to San Antonio)...but the above statement is untrue.

All the consumer need do is to ask and the range IS stated, both verbally and in writing. Its the law as far as banks are concerned.

Regarding applications taken at banks for either consumer loans or credit cards...banks are required to disclose to the consumer the rate ranges or the rate if the loan/cc is approved. If the loan/cc is denied, the consumer is given written notice with the phone numbers for all three credit reporting agencies. It is then the consumer's responsibility to call the agency/ies to inquire as to why credit was denied.

All banks have a range of credit scores by which they base their requirements for the consumer. For instance, on a CC application a bank may require a minimum score of 620. If the consumer asks, we are required to disclose.

sarge33rd
ID: 76442923
Mon, Dec 17, 2007, 22:47

If asked...and made mandatory...are not the same. Besides which, dealers dont grant credit. (Not counting of course, "BHPH" or buy-here-pay-here lots.)

Khahan
ID: 561119313
Tue, Dec 18, 2007, 09:22

Sarge, post 43:

There is more than enough anectodal evidence out there to support the belief that when you are dealing with a car dealership or car salesman, you need to be on guard, go over everything with a fine tooth comb and second guess everything you are told. If you individually are completely on the up and up (and I've never heard a story that you are not so I give you the benefit of the doubt), then I applaud you.

But the fact of the matter is, if you talk to any random person on the street who has bought a car, they will most likely have a story of being hoodwinked, deceived, screwed over or in some way having the deal not represented properly.

I have one myself where the dealership started out a price of $13,000 a dealer special took $2000 off that price, negotiation took another $750 off and my trade in took off another $3000. I had $3800 left on my loan. When the whole price was figured before tax/tags he wanted to charge me around $11,800 (which seemed a few hundred too high).

I asked him 2 or 3 times how he was arriving at that figure and he kept explaining verbally about the base price less incentive less this and that. Finally he wrote the numbers out and I figured out the problem.

When he took off for my trade-in he was figuring +$3000 to me -$3800 due to the loan payoff which puts me upside down by $800. Fine. That was true. So the line for my trade in was -$800.

He then got to my car loan and told me I have a $3800 car loan which they were paying off. See the problem?

Yes, always get an offer in writing, detailing every aspect of the offer.

DealerCompliance
ID: 351123160
Tue, Dec 18, 2007, 09:55

Katie, I'm a little confused about your post. As far as the 'range', are you speaking of the range of the bank's acceptable credit score or the 'range' of available credit scores in which a consumer's score can fall?

Second, the customer does not leave with the adverse action notice and they do not call the bureaus to find out why they were declined. The letter states the factors that were unacceptable to the bank. The consumer is afforded a free copy of their report (without score) to see what is on their report to dispute anything they feel is incorrect (FACT ACT of 2003) but they do not ask the bureau why they were declined...that's the bank's decision.

Back to the 'score' and it's impact on approval. This is where, through this type of legislation, even more consumers will become perplexed with the credit decision process. Lenders use more than just the credit score to determine the extension of credit. If a consumer's score is within range but they are deficient in other areas (too much debt, not enough stability at job/residence) they will either be declined or approved at a different rate to account for the additional risk.

A dealership does not issue credit. They arrange financing, just like a mortgage broker. Even if a customer fits a specific underwriting criterion, they may be changed to a different rate (lending 'tier') because of the age of the vehicle, miles on the vehicle, etc.

This is something that is between the credit applicant (consumer) and the credit issuer (bank). Not the dealership. The main reason for a lot of the confusion is most consumers see the dealership and the bank as one entity. This, of course, is incorrect. The dealership can, as a convenient option, arrange for the financing of the vehicle. They may also have access to exclusive programs (0%, etc.) that will benefit the consumer.

They are the face of the approval process but they do not control the approval process. Legislation such as the text in the original bill, make them also accountable for the credit decision, in which, they have no control. Those are the dangers.

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 10:08

Khahan..there is anecdotal evidance for every allegation one would care to make. MOST of those stories you hear from people on the street...are not because of crooked dealership dealings, but because of misinformed consumers.

For example... deep subprime buyer. Score is below 560. There are lenders who will write loans to those folks, but they CHARGE the dealership as much as 27% of the amount financed up front. They cap "Line 3" (Sale price, minus net down, plus TT&L) at 100-110% of NADA TRADE value. Then your line 5 (Amount financed, is generally capped at 125% of trade, or less.) Now, lets assume a car with an even 10k trade value. The dealer, probably has about 10,500 in it. Cost is figured from 11k, to accomodate advertising, lot expenses etc etc. (Its called "PAC" and stands for prep, advertising and conditioning IIRC. FYI...On average, a dealership spends $200 in advertising for every car they sell. SO Tree...your comment about not paying for their advertising, is just so much BS. That dealer, was giving you an itemized list of expenses, vs hiding expenses, and you felt compelled to take exception to it.) Anyway...lets assume TT&L at an even 1k. So, line 3 for the loan cannot exceed 110% of 10k which is 11k. But thats what the dealers cost is, plus TT&L. So, the customer says I can give you 2k down. GREAT! 12k sale price, plus 1k TT&L = 13k, less 2k down = 11k. Should have a deal right? WRONG! That lender is goping to send the dealer 73% of the 11k. Only 8030. The dealer has the 2k down, so that makes 10,030. Take out the TT&L, and the dealer has 9030 cash, for a car thay have 11k in. Nice 2k loser deal. Nope..THAT customer, needs FIVE grand down. Car sells for 15k. Minus 5k = 10k plus TT&L = 11k. Dealer gets 8030 from the lender, plus the 5k = 13,030. Minus the 1k for TT&L, leaves the dealer with 12,030 for a car they have 11k in. Problem? THAT guy, is the one bitching about how the dealership charged him 15k for a 12k car. Truth is? It was the lender who did it, based on that customers crappy record of defaulting on loans. HOWEVER, Federal and State laws, do not allow the dealer to even TELL you about the charge from the lender and none of them, allow us to line item show that charge and turn it to the customer. Nope, we have no choice but to "hide" the charges in the selling price. THAT, is why dealership sales people wont tell yopu the price of a car. They dont know if you're financing it, they dont know what your credit looks like, but they do know, once they disclose the price...we then find out your credit svcks...we cannot increase the price to cover costs. So......we dance around the price question, until we know how the deal willg et put together. Thats not smoke and mirrors gang...thats survival.

DealerCompliance
ID: 351123160
Tue, Dec 18, 2007, 10:36

Khahan, 'any random person' has the perception of a bad deal because they usually walk in expecting to 'be screwed'. Buying a car ranks just above a dental visit on the list of pleasant things to do. Everyone negotiates a car deal and dealers, as 'for profit' businesses, are going to try and make money. That's why they don't start with minimal profit from the beginning. The fact is, the dealer still operates on a lower profit margin than other businesses. Do you also negotiate furniture, appliances, electronics and jewelry? No but the markup on these is HUGE! We, as consumers, pay more of a profit % to these retails than to car dealers but we are getting screwed by the dealer?

It's because 1) there is a price negotiation and 2) it's a complicated purchase when a trade-in and/or financing is involved. It's not that the dealer is there to deceive the customer but because they are trying to make a profit, and there are several price offers involved, the consumer thinks they are being lied to everytime.

Using your example, I don't see where you were hoodwinked. When you trade in a car that has a loan balance, that balance has to be paid off. The equity you have is applied to the new car purchase price (positive equity will reduce, negative gets added). This is where a lot of people think that extra amount is dealer profit.

The value of your car was $3,000. This is deducted from the selling price and then sales tax is added on the amount (you get a credit for the amount of the car you are trading). The loan amount is then added back to the purchase price because the current lien holder has to be paid. This is why the $800 was added back. This did not go to the dealer, it went to the bank. If your balance was $2800, instead of $3800, you would have had $200 that reduced your purchase price instead of $800 that increased the price.

Does that clear it up a little?

Khahan
ID: 561119313
Tue, Dec 18, 2007, 12:37

Dealer, he was taking off for the loan twice. When he figured trade in, he took off the loan amount. Then he would later talk about the loan amount and take that off again.

When he was itemizing he should have wrote out something like this:

Base price: 13000
dealer incentive -2000
additional discount: -750
trade in: -3000
loan repayment: +3800

Then said something along the the lines of, that is our starting point. Based on your credit score, the amount of loan and your monthly payment may vary. But he didn't do that. He did this:

base price: 13000
dealer incentive: -2000
additional discounts: -750
trade in: -2200 (trade in less upside down)
loan repayment: $+3800

When I called him on this I got a very unconvincing, "Oh, sorry bout that, got the math wrong." Its instances like that which gives your industry a bad image.

As for the financing and reporting, it should all be spelled out where every $ comes from and goes to if the cosumer asks and it should not be a hassle to get it.

I'm an insurance agent in Pa. When I run a quote, I have to disclose that we will do a credit check. I have to disclose that we check on driver license history and prior insurance history. I show the insureds an itemized breakdown of their coverages and costs per coverage. I tell the insured on a monthly payment there is $3.50 servicing fee with each payment. Every single cent is accounted for.

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 13:00

base price: 13000
dealer incentive: -2000
additional discounts: -750
trade in: -2200 (trade in less upside down)
loan repayment: $+3800

It should have read:

Sale Price: 12,250 (Dealer discounts arent normally shown on a bill of sale)

Rebate: 2,000
Trade Allowance: 3,000

Adj Sale Price: 7,250
Tax: XXXX
Title: XXXX
License: XXXX
Pay-Off: 3,800

Then add those lines. (Or something along that format at any rate. IOW, your price should have been 11,050 plus TT&L, after the trade-in and payoff.

Some states give a tax credit on trade allowance and some dont. SO the overall format may vary a little, but that would be the gist of it. That said...Do honest mistakes get made? Of course they do. Do some dealers try and pull some shenanigans? Of courcse they do. Just like some insurance agents, collect a premium from a client, and never submit it but put it in their pocket. Just like some retail clerks, ringup excessive prices on customers, just like in every business out there. The truth though, is that the number of dealers operating in a less than honorable fashion; has been on the decline fro several years now. The "crooks", while still there, are much diminished in their numbers.

DealerCompliance
ID: 351123160
Tue, Dec 18, 2007, 13:02

Ok, I see the problem now. You are right, they deducted the $800 from the value of the trade. Might have been a mistake, might have been an attempt to make $800. And you're right, if they give you the trade value and then try and slide numbers by you, this is underhanded. Good thing you caught it.

Disclosure of what $ the consumer is paying and to whom is a good thing. I want to see what everything costs me and who gets the $. But laws like this require complete disclosure of cost and retail price.

If you put this example into your business, your disclosure would be required to include how much commission you are making on the policy and the amount of the residual payments. Is this fair? This is why laws like this are anti-commerce under the guise of being pro-consumer. There has to be a middle-gound that protects consumers but doesn't limit (or punish) a free market.

MCDealer
ID: 4011291810
Tue, Dec 18, 2007, 13:41

OK gang. New member here, and I thought I’d jump in on this.

It seems that the vast majority of you are convinced that all dealers are crooked thieves that are out to screw you for all they can get. According to you folks, we are apparently not capable of telling the truth. While I won’t dispute that there may be dealers out there that still operate this way, they are becoming obsolete in my opinion. Just like anything else, it’s always the few bad apples that gives the entire industry a bad name. For this reason, I for one am totally in favor of any compliance laws that make sense. The laws that make sense will weed out the remaining bad apples and this can’t be a bad thing for anyone. The laws that don’t make sense, such as the one’s Sarge has been arguing above, just serve to create more confusion and more needless paperwork. If you look at the Bill that was proposed, vs the one that actually passed, you can see (or should be able to see) that every point Sarge disputed was either amended or tossed out entirely. Since that horse has been beaten to a pulp, I see no reason to continue with that line of conversation.

What many of you don’t seem to realize, or care to admit, is the fact that it’s the dealer that is intentionally misled or misinformed on a daily basis. When a customer fudges their income on a credit application, it’s the dealer who is ultimately held responsible, not the customer. And dealers get more idiotic requests than I would have ever thought possible. I had a customer once, serious as a heart attack, ask me where he could mount a cup holder on a sport bike.

Worse? True story……. Customer comes in. She’s a new rider in her early 50’s, (still young!) an Army Veteran, and has had hip surgery. (not recently) As a motorcycle enthusiast, I am passionate about the sport, and about promoting the sport to new riders. I think it’s my responsibility as a dealer and as a human to make as certain as I can that I put a new rider on the right bike, and I do my very best to ensure that that new rider doesn’t turn into a hurt or dead rider. I take that responsibility seriously and one of the best parts of my job is educating new riders. So anyway, I spent an enormous amount of time with this woman. She seemed very coherent at first, but the longer I talked with her, the nuttier she seemed to get. (Over a 3 day period) She actually purchased the bike she picked out the first day, and ordered a back rest. We were going to deliver the bike to her home (free of charge) when the back rest came in. She gave me directions to her home on day 2, after purchasing the bike, doing all of the paperwork and ordering parts the first day. Day 3 she comes back in with her friend, and wanted me to let her lie down on my showroom floor so I could drop this motorcycle on top of her. This was so she could see if she was able to get out from under it and pick it up off the floor unassisted.

Um…….HUH????? This, after we’d paid the bike off and warranty registered it. So now, because I refused to drop a motorcycle on a customer, I have a brand new, serviced, USED motorcycle on my floor.

This is the type of lunacy that we deal with on a daily basis. I’m sure many of you will find this story funny. Ask yourself though. If you spent 3 days working on something for one of your customers, and it turned out to be a waste of your time, not to mention it ended up costing my dealership money……How would you feel? Car and motorcycle salesmen do this every day. For us, it’s a fact of life that we have to deal with if we choose to do this job. It isn’t for everyone, and the new laws that make it harder for the bad dealers to operate can’t come fast enough for me. Perhaps, when the last of the bad apples are gone from this industry, the general public will cut the good dealers some slack and maybe even be respectful of our time and efforts like we’re expected to be of yours whether you deserve it or not.

100

Khahan
ID: 561119313
Tue, Dec 18, 2007, 13:48

The truth though, is that the number of dealers operating in a less than honorable fashion; has been on the decline fro several years now. The "crooks", while still there, are much diminished in their numbers.

Thats the type of thing that I will believe when I see. As far as I can tell, though, this bill goes a long way towards eliminating those perceptions. However, I will also admit I may be looking at this strictly through the lens of a consumer. The possibility is there that the law may have crossed that line between pro-commerce and pro-consumer. I just don't see it as so.

101

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 13:53

This bill, requires virtually nothing which isnt alreasdy required via Federal Laws/regulations. In all honesty? The version which passed? Is as meaningful as is the security arrangements we all acknowledge as being little more than a "feel good" band-aid.

Those dealers which currently comply, will continue to do so. Those few wqho dont, will continue to not.

102

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 15:19

Anyone in sales has plenty of stories about bad customers. It's part of what we accept as our cost of doing business. I won't bore you with my bad sales stories, but they exist.

I am in the debt collection field. I sell our services to hospitals primarily. We, too, are heavily regulated by FDCPA, FCRA, FACT, GLB, HIPAA to name some. Our industry has a "reputation" that is ruined by a few bad apples, causing the general public to believe all bill collectors are snakes. I get it (and I bet many of you could receipt a bad experience (or ten you) all had with my industry).

I am pro-legislation whose purpose is to protect consumers because usually the same legislation protects the business -- it states the rules, if you will, so we all now how the game is to be played. Getting back to the car business, since it is one of the very few purchases that is "negotiated" there are going to be bad experiences and hard feelings. I don't blame a dealers hp for trying to make profit. I don't blame a consumer for trying to get a below market deal. Unless the entire industry changes, it will always be. The best thing that could ever occur was a shift in fundamental thinking from the top down and and price cars like any other commodity. The market would eventually determine the price point(s). This would take some time, years maybe.

I do think there is a taste of "bait-and-switch" in the car sales industry. There is so much fine print in ads, you never get the truck for $10999 with 0% interest. Now that the dealership has you there, the attempt si to wear you down with confusion (but legal) mathematics, sales "TO's" , and if-you-buy-today-and-only-today-promises and then bring in the F&I guy. The final few deals are going to be aimed at improving the dealer bottom line. I do believe they try to get you to commit to $x and then sell $x +3 as "c'mom, just $3 more and we can all go home and you'll have the car" Don't think I'm right? Try to walk out of a dealer ship after "wasting" 2 hours of the salesman's time. I once has a dealership "lose" my trade in car keys : "Can't find 'em" until I said I was calling the place, then they miraculously appeared out of nowhere.

Sorry for the diatribe. I see both sides of the fence, but i do believe dealerships lose no sleep over getting that last few cents when they have a sell. While those in this thread in the car biz seem to lament the impression, perception is reality until you change it. That's why I remain acutely aware that many customers I interact with don't trust me. I have decided to understand it as opposed to tell them they are wrong.

103

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 15:27

link

I don't think I know enough to refute or agree with all of this article, but I find it interesting I've read sarge make each of these arguments over time.:)

sarge: I'm not busting your chops here, I am interested in this discussion as it pertains to sales. I have an open mind.

104

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 15:35

Oh, and can we go back to 21/22 again?

Seriously, why would 8-figure rich guys invest in a business yielding 2-3% ROI when they could do better in many other markets (stock, bond, mutuals, real estate)? That's not even keeping up with inflation.

Admittedly, I don't know the industry, but it seems counter-intuitive to believe they all want to accept such a low return? Certainly they make more money that that?

105

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 15:51

No rfs, they dont. 2-3%, is indeed the operating margin. In fact, if we took ALL of the new car sales departments across the country and combined their numbers/status into a single new car department. The last year that department would have been operating "in the black"? Do oyu know when that was???

(Hint, it was in the 1980s!!) True statement.

That link from 103...more misinformation, coming form one who failed to cut the msutard in the car biz I'd wager.

My first month in this business? I worked 8-8. 6 dayss week. I didnt GROSS, $1,000 at the end of the month. That was Dec 1997.

106

MCDealer
ID: 4011291810
Tue, Dec 18, 2007, 15:54

As far as the question, "Are you going to buy it today?" goes......From my perspective that's a very easy one for a couple of reasons. For instance, if I only have 1 of something, which is real enough in the MC industry, ESPECIALLY as it pertains to used inventory, why would we go back and forth for 30-45 minutes negotiating a deal if the customer then has to go think about it, or ask their husband/wife for permission. Let's say we've done that, the customer leaves, and the next guy that walks through the door loves it and buys it.

Bike is gone. Then, the first guy comes back in and is either mad that the bike is gone, or expects the dealer to get him another one for the same price, not realizing that dealer transfers cost the dealer money in transfer fees from the manufacturer and the gas to go get it. Not to mention paying a driver to go get it.

That's the reason I ask the question. Also, why would I give you an out the door, heavily discounted # to use to beat the poor guy down the road over the head with? He beats me by $50.00 and I've lost the deal to a guy 1 1/2 hrs away.

I understand wanting to get the best deal, but using my # to beat up another dealer isn't fair to either dealer. Unfortunately, until dealers as a group work together to stop this it's going to continue to happen.

Like I said, I do understand wanting to get a great deal, but the the consumer should understand that it takes real money to operate a dealership so we're not doing business behind Uncle Goober's barn. For instance.....when is the last time you heard someone walk up to a Wal-Mart employee and ask them for their best out the door price? It doesn't happen there, regardless of the fact that they have 8 times the mark up I have.

107

Wilmer McLean
ID: 71157189
Tue, Dec 18, 2007, 15:55

Sarge and Michelle Malkin Embracing ;)

108

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 16:05

105/sarge, OK I believe you. 2% operating margin. So, please give me a reasonable answer to my question: Why do rich guys buy dealerships when they are better investments? Still seems like they would migrate to other businesses for earn more ROI? I cannot believe 8-figure capital migrates to such poor return. Err, at least I'm skeptical.

On the topic of car salesmen compensation. I have know 4 sales guys and 2 F&I guys personally in my life. They all worked ball-to-the walls hours and they all made $50k to $100K+ incomes. I've seen pay stubs. If the margins are so low, how can the employee be making so much cash?

106/MCDealer, Thanks for engaging me in the conversation. Follow up to your "when is the last time you heard someone walk up to a Wal-Mart employee and ask them for their best out the door price? It doesn't happen there, regardless of the fact that they have 8 times the mark up I have." comment.

I have never heard that. Why doesn't the industry say "the price is the price, sir" Consumers ask for the deal-price because it's become common to ask and get a price drop which has yielded the game of negotiation. I'm not criticizing YOU, I am criticizing the system the dealer/consumer have co-conspired (equal blame IMO) to create. Stupid system.

109

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 16:09

106/MCDealer, Sorry meant to add on the "buy today" comment. Fair enough. I understand why you ask it. As a consumer, please understand my last vehicle was $50K plus and there was much competition for me to choose from (Cadillacs, Lincolns, Hummer, Porsche). I can only speak for myself, but I ain't dropping "fitty" until I have reasonable explored all of my options. If you don't want my time, then, please excuse me. If you do a good job (although i understand not all consumers will do this), I will return an buy from you. And, when I bought..... there were 37 Lincolns on the lot to choose, not only one.

110

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 16:09

Stupid system indeed. And truth is, the dealers have themselves to thank/blame for it. BECAUSE the margins are so slim, no dealer wants to let a deal walk over $50. Sooooooo, they caved, and caved and caved, until now.....its almost like a bunch of hookers all standing on the same freezing street corner. trying to get the same lone john. They all offer the same thing, so its whose gonna do it for the least amount of money.

Trouble now? To change it, would require co-operation, and that would call for collusion and that would result in MASSIVE lawsuits.

As to why they own dealerships? Ego. Pure and simple.

112

DWetzel from work
ID: 3316412
Tue, Dec 18, 2007, 16:10

Re: 106: in most industries this would probably be an antitrust violation. If this "us against the consumer" attitude is representative of the car dealer mindset in general, then the legislation in Minnesota didn't go far enough.

113

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 16:13

Lightbulb. When you say "dealership" are you counting the service department? Is sales a loss-leader to secure auto-body and repair customers where the returns are reasonable?

I know John Elway is getting rich(er) and I won't stop until I prove it. LOL

114

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 16:16

re: #110 As to why they own dealerships? Ego. Pure and simple. Sorry, I ain't buying it. Sure, SOME ego guys want the name on the sign, but too many smart rich guys too cut-throat for that to be THE answer. You telling me 1000's of rich guys willing to say, hey honey, I know we are losing net wealth to inflation, but hey, isn't my name pretty up there? C'mon.....

115

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 16:27

Most DPs, are in an income bracket where they need write-offs. Many dealerships, sell inventory at a loss, for that express purpose.

When I say "dealership", I mean just that. The entire dealership. The only point in selling new cars, is to get that late model used car in trade. The reason for having a franchise, is to secure various avenues for financing. Independent dealers, play hell getting banks to sign on with them to execute "in-direct" lending. (Where the loan is arranged outside of the lenders premise and the dealer gets some payment for using that lender.)

In Powersports, ATVs for ex, carry virtually no profit margin at all. The reason for selling them? To sell their accessories, which is where the profit on those lies.

re 122...???? I'm confused. How is there an anti-trust violation, when its the consumer trying to get a nr from me that they can try and use to beat up a dealer 50 miles?

116

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 16:35

Most DPs, are in an income bracket where they need write-offs. Many dealerships, sell inventory at a loss, for that express purpose.

Still skeptical, but if I go with this logic, then for gawd's sake, stop complaining, you admit to selling at a loss for a write-off then have the nerve to complain that there isn't enough profit in the next breath. If you need the tax loss, sell at treater losses. You can't have both sides of the street on the argument. I need losses , but I want profit, huh?

Off to a meeting..... I find this fascinating....This non-industry outsider is going to toss out a premise: the dealers/owners are making money and you ain't privy to it cause they want you to believe their poor so they can work you to death. Naw, can't happen, huh?

Just like baseball owners opened their boos to congress and cried poverty. Right.

117

MCDealer
ID: 4011291810
Tue, Dec 18, 2007, 16:36

re: 112. How is my not wanting to give a lowball # out an antitrust violation?

re 108/110: Both are absolutely correct. It IS the dealer's fault. I would never say otherwise. And like Sarge said, there's no way to change it at this point.

re: 109. It isn't that I don't want your business. You have to understand though that there's a difference between someone who is serious, and someone who comes in with a chip on their shoulder who is rude from minute one and just expects the dealer to roll over and throw their legs in the air.

That is possible the dealers fault too. Perhaps the fact that so many people distrust dealerships is the reason for the attitude. In some cases, I can't say that I blame you exactly. However, is it so wrong of me to wish just once for the benefit of the doubt? If I'm straightforward and honest with you from the very beginning, is there any reason to believe I won't be through the entire process?

Also, I wonder......if you are so certain that you're dealing with someone untrustworthy, WHY deal with them?????

There really are dealers out there that go out of their way to take care of their customers. I am one of those. However, if you're rude to me from the very beginning and I've done nothing to deserve it, I'm likely to give you MSRP and send you to down the road motors so you can be their problem. I don't want ALL the business. Just the good business.

118

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 16:41

116.....RFS, I'm postulating some of the reason why some people would own a dealership. Certainly not all, and certainly not all inclusive. You asked, I answered for some of the people.

Truly, ego is probably the biggest reason. Same reason those same people do their own commercials, when its painfully apparent they should NOT be on TV.

Are there payments made to dealers upon which no commissions are made? Of course. So what? Same is true in most businesses, insurance included.

Walk into a dealership sometime in the next couple weeks. Take note of the faces. Then go back 90 days later, and see how many of those faces are gone. This is one TOUGH business.

119

DWetzel from work
ID: 3316412
Tue, Dec 18, 2007, 16:42

MC (and sarge), I was referring to your comment: "I understand wanting to get the best deal, but using my # to beat up another dealer isn't fair to either dealer. Unfortunately, until dealers as a group work together to stop this it's going to continue to happen."

I'm assuming I am misinterpreting this. I'm sure you aren't suggesting that dealers should band together with each other to make things as difficult as possible for the consumer.

120

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 16:44

They cant. Its illegal. (Collusion) But since when would holding your margins, constitute making it difficult for the consumer?

121

DealerCompliance
ID: 351123160
Tue, Dec 18, 2007, 16:51

First, as far as the dealership profit goes, here is a link to the NADA 2006 survey of dealerships. To give you the quick facts: Avg. total sales: $31.8 million. New car dept. net profit: ($30,000)--yes, negative. Used car dept: $215,000. Service/parts: $330,000. This is $515K net profit on $31.8M in revenue.
NADA Data

108/rockafellerskank: making 50-100k. These guys are successful but have to work 70+ hrs. to make this and there are 10 people that make less than $40K for every guy making 75+. 15-20 yrs. ago, your friends would have made double/triple that. You break down their per/hour income and it's lower than if they had a 9-5. Their quality of life is also lower because they have less time with their families.

112/DWetzel: out of context comments like this that create more, not less, misunderstandings. the 'buy it now' conversation is negotiating to find out how serious the buyer is. again, going back to margins and trying to make a living, these guys want to sell a car everyday. if they have a better chance "today" with someone else, that's where they want to spend their time. not with someone that may, or may not, be back. It's the thin margins that have created this and we're not going to fix it 1)overnight; 2) on this forum.

Looking into the future. Most dealer's have already gone to a flat rate unit pay. This allows for better customer service and minimal price negotiations. The downside is, the profession's average income is going down. People that were making $60k will now make $40k. This means they will leave because they can't support their family. Their experience will be replaced with younger, less experienced, and less professional, salespeople. This will hurt customer service.

109/rock: buying a luxury car is different, and the dealerships different, than main stream autos. Walking into a luxury dealership, and dealing with their 'professionals' is different than 3 guys running after your car at a Chevy store. There are minimal, if any, price discussions because they hold the line on price. These dealers are making way more $ than main stream dealers and selling fewer cars in doing so.

But that's one of the issues. The guy paying the dealer 15% gross on $40k doesn't have any problem. The guy beating the dealer into $500 profit on $20k is the one yelling about being screwed. Back to my point about perception. Do you go into a (say) Dodge store with your defenses up? Why not the same defense at a BMW store? See, even the dealerships operate differently.

The consumers and the dealers both started this problem. It was the first guy that came off MSRP and it was the release of Consumer Reports giving the consumer the power to negotiate. So, until both consumers and dealers can figure out a way to fix it (one price cars and low paid sales people with no customer service skills), it will continue.

But to place all the burden on dealerships through more legislation is not the answer.

122

DWetzel from work
ID: 3316412
Tue, Dec 18, 2007, 16:54

We understand. Car dealers need to make a profit. That's fine. It's a business.

But when someone like MCDealer comes in and says, essentially, "I don't want the customer to know what I consider a fair deal because the guy down the road might give them a better one"... well, guess what? THAT is also business. It seems like you guys don't seem to understand that the buyer is FORCED to do this by the nature of how YOU have chosen to operate since the beginning of time.

Car dealers have set the ground rules, and change them every day for every consumer--but when the consumer tries to use the same tactics, it's somehow "unfair". I call BS on that.

As for the "what if someone else comes in and buys the bike"? Well, congratulations dealer. You sold it for a price you were comfortable with. Consumers really do understand the risks inherent in their seller running out of inventory. Really. They do. Using that as a reason to force the guy to buy RIGHTNOW is a lie.

What if you force that guy into buying the bike today, and someone comes in tomorrow wanting to buy one just like it for $500 more? I guess you as the dealer will be complaining that you got taken by the consumer again.

123

DealerCompliance
ID: 351123160
Tue, Dec 18, 2007, 17:00

DWetzel, I think what MC was saying was that would be the only way to stop the dealers from lowballing each other...agree not to lowball. And we are correct...it's illegal!

Talking about the ego thing and the 'don't want them to use my number to beat up another dealer for $50' comment. When I sold cars (years ago), I had a couple drive up in a Nissan that had the dealer's tag on the back. They were out on a Sat. looking at cars and drove through our lot during their Nissan test drive (no saleperson). We not only sold them a Mazda, we sold it so cheap they couldn't say no. My sales manager took the Nissan back to the dealership himself to give the manager the keys. The reason? The Nissan manager and my manager hadn't liked each other for years. Talk about an ego! The next policy in place at the Nissan store...salesperson with every customer on a test drive. :)

124

DWetzel from work
ID: 3316412
Tue, Dec 18, 2007, 17:01

"112/DWetzel: out of context comments like this that create more, not less, misunderstandings. the 'buy it now' conversation is negotiating to find out how serious the buyer is."

I would venture to guess that very, very few people walk into an auto dealership that do not have some level of interest in purchasing a vehicle. There's nothing wrong with asking a consumer, in however you choose to ask it, "Just how serious are you about buying something?" But understand that for most people, a car is the second largest piece of property they will own (behind their dwelling). Asking them to rush that decision, in most cases, is just going to piss them off. I know for certain it would piss me off.

Let's say I walk into your car dealership today. You run the "buy it now" spiel at me. I'll be perfectly happy to tell you, in all honesty, that at this point I'm just checking what's available in the marketplace, pricing, etcetera, and that I do plan to buy something within the next 3 months.

How do you expect most car dealers to treat someone like that? More importantly, how do you think the consumer expects to be treated in that situation? Do you think it should be fundamentally different for automobiles as opposed to other fairly large-ticket items (let's say a plasma TV, or a home computer)?

125

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 17:05

That isnt what MCD said. MCD said they are NOT going to give you numbers and let you walk out the door with them. Why? SImple statistics.

90-odd per cent of the people who walk onto a dealership lot, will buy within 72 hours. Thats a fact. 86% (or thereabaouts) who walk off your lot WITHOUT buying, will never come back. Thats also a fact. Soooo, why spend your time and energy, on someone who wont buy from you? The entire point of the salespersons questions, is to try and identify a buyer, from a waste of their time. Blunt? Perhaps. Cruel? You might see it that way. But recall what happened with my brother and the Mall of America "test drives"?

The questions a seasoned salesperson asks, comes from vast amounts of experience, evaluation of the sales experience from both sides of the coin, and the need to try and hold some degree of profit without wasting time or giving away "ammo" to be used against us. Consumers play the same game by the way. Going over our used car with a fine tooth comb, pointing out every minor little nick they can find, while insisting that their beat to hell trade is in pristeen condition.

126

DWetzel from work
ID: 3316412
Tue, Dec 18, 2007, 17:13

Maybe that 86% number would be a lot lower if the consumer were treated more fairly (or at minimum, FELT like they were being treated more fairly).

My business is commercial real estate. Before that I was an apartment leasing agent with the same company. One fundamental principle that we were always taught when dealing with a potential tenant was to imagine that person with about $6,000 stapled to their forehead that they would want to give you. Now, would you want to be nice to that person or not?

That car dealers can't imagine the same thing seems to be a fault of the culture.

127

boikin
ID: 59831214
Tue, Dec 18, 2007, 17:15

i just want to say this has been one of best threads i have read in while. It just seems to me that things would be much simplar if there was no hangling and that everyone pretty much gave you the same price. i have read that some foreign car makers are going to no hangling sales model (i think this may have been discussed in another thread). i guess the problem with this model is the trade in value though that should be to be classified based on some predetermed statistics. I also remeber the article talking about how the big 3 are reluctant to move away from the current system.

128

MCDealer
ID: 4011291810
Tue, Dec 18, 2007, 17:15

Nope. Once again DW, you have taken something someone said that you didn't like and twisted it to mean something entirely different.

If you're going to quote someone, at least get the quote right, because using "essentially" and then adding quotation marks to YOUR misguided interpretation to what was said is ridiculous.

As far as me "FORCING" a customer to buy a bike???? That's to ludicrous to even dignify with a response. But what the heck......Are you seriously trying to tell me that when I ask if you're planning to buy today that translates in your mind to me forcing you to buy?????LMAO!

129

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 17:16

I've been at multiple domestic dealership where they TRIED to go to "No Haggle" pricing. Guess what? The consumer wont let them. We advertised "No Haggle", we put hard prices on everything on the lot, and YOU...the consumer...STILL wanted to argue the price of everything on the ground.

130

DWetzel from work
ID: 3316412
Tue, Dec 18, 2007, 17:19

128/MC: Sorry. This is obviously getting me a bit more heated (and the fact that I'm at work on a slow day doesn't help matters).

So, answer me this simple question to see what we can do to get the conversation started. I walk onto your lot, you ask me, "Do you plan to buy something today?", and I say "No, I am checking a few different lots, I'm going to purchase something next Saturday with this huge wad of $100 bills I am showing you." How do you react to that?

131

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 17:23

Same way I do I'd wager....come back Saturday and we'll talk.

132

boikin
ID: 59831214
Tue, Dec 18, 2007, 17:23

Sarge, was the no haggle pricing not working only at the domestic lots or are customers not receptive at all lots?

133

DWetzel from work
ID: 3316412
Tue, Dec 18, 2007, 17:31

"I've been at multiple domestic dealership where they TRIED to go to "No Haggle" pricing. Guess what? The consumer wont let them. We advertised "No Haggle", we put hard prices on everything on the lot, and YOU...the consumer...STILL wanted to argue the price of everything on the ground."

So, just say no. Seriously. If your "no haggle" price is fair to the consumer, and the other aspects of your operation are up to snuff, it'll work eventually. Behave like almost every other business in the world, set a fair price based on factors other than "this is what I think I can get out of this specific sucker". Heck, even gas stations don't raise and lower their prices based upon whether the guy pulling up to the pump is in an Armani suit or not.

Of course, I agree that this does depend to some degree on other dealers not undercutting said price. But that is no different than ANY other type of business.

Expecting the consumer to not even attempt to get a fair value for their money, as you seem to want, is just silly, and using that as a reason to justify all the various machinations that dealers seem to want to go through is an insult.

134

DWetzel from work
ID: 3316412
Tue, Dec 18, 2007, 17:36

"Same way I do I'd wager....come back Saturday and we'll talk."

What if I were willing to provide you with all the information that you need to make an informed decision about my credit, my ability to purchase, etc. (though none of that should be an issue of course, since I'm willing to pay cash for it)? I'm sure your answer is going to be the same.

In other words, a cash-paying consumer attempting to figure out how much a car costs, can't do it without playing games with the car salesman. And you wonder why the consumer has a negative attitude towards car salesmen?

135

chode
ID: 293141514
Tue, Dec 18, 2007, 17:43

Those consumer bastards ... "cheap fvcks" that they are, trying to get the best deal they possibly can. Price haggling in an industry of price hagglers? Pitting manipulative sellers against one another in order to pay less?? Outrageous!

Misunderstood car dealers need to band together to collectively enforce their God-given Twenty-Eighth Amendment rights to enjoy 40-hour work weeks and be compensated at upper-middle class income levels. Then they could reasonably be expected to treat consumers with honest, fair and transparent dealing. But not before. Sheesh!

136

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 17:52

At some domestic lots, I've heard of it working. (Ironically enough, the first domestic lot I knew of it working at was a Ford store in Twin Cities.)

I had a friend who sold cars at an highline import store several years ago. (BMW, Porsche, Jag, Mercedes kind of place.) He used to sell 4, maybe 5 cars/month and made 3 times what I copuld if I sold 20 Fords. He used try and recruit me, telling me when a customer asked him the price of a car. He'd point at the window sticker; "You're choice sir. Any amount you'd like to pay, this number or higher."

137

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 17:53

and chode STILL, has yet to say anything remotely resembling intelligence.

138

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 17:59

133, is a prime example of not taking it all in, but only bits and pieces. Reread post 94. Remember that, as you review the statistics form post 125. THOSE, are the reasons "for the games".

139

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 18:22

re your question of 134....In all honesty DW, if you arent buying today, I'm not giving you the time of day. You may indeed, be in that 10% that will come back. I cant count on it and I have no way of knowing it. What I DO know, is that:

1) EVERYONE tells me they are in that 10% bracket
2) 90% of the people telling me that...are NOT in that 10% bracket.
3) I cnnot make a living, off 10% of the population. Its the other 90% that allow me to pay my bills and keep food in the pantry.

140

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 18:25

Not at all a-typical of a dealership.

141

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 18:41

Don't some of the 86% who walk out of your competitors' lots walk into your lot and become sales for you? You want to talk about the walkers, but you do get some buyers that walked out on the other guy, don't forget. It's just math. Sure you lose a lot of customers. but you gain a lot of the other customers your competitors pissed off. We used to call these customers "Be-Backs"

Enjoyed the convo sarge and MCDealer. Gotta run. Lot's more points to make, but I will save it for the next rainy day. Gotta go sell something to pay the mortgage!

142

MCDealer
ID: 4011291810
Tue, Dec 18, 2007, 18:43

re 134: I could care less how you pay for it. Makes ZERO difference to me or really to any dealer these days. Not to mention, it is illegal for me to treat a cash customer any different than a finance customer, and vice versa. It's called discrimination.

It isn't about playing games. You seem to have missed my whole point. That's exactly what I'm trying to avoid. Come into my store, ready to buy, with a good attitude, instead of a chip on your shoulder, and I will bend over backwards to do whatever it takes to earn your business and not get fired.

143

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 18:45

re 141...If you left the other lot, then either that salesman wasnt good enough OR you're not ready to buy. I'm good enough to find out which. If its the latter of the two, it makes no difference how well I do my job, you aren't buying anyway. So...why SHOULD I bother with you? To answer your questions, let you occupy my time, while the other salesman get the customers who are buying? Sorry...I think not. You want to kick tires, do it on a day when the salesman arent there.

144

DealerCompliance
ID: 351123160
Tue, Dec 18, 2007, 18:45

Some of the no-haggle pricing is starting to creep into the domestics but they are doing it backwards. GM has reduced the MSRP of their vehicles and eliminated rebates. By reducing the MSRP, the spread between the invoice and the sticker is lower, thereby leaving the dealer less room to negotiate. For instance, the spread on the Pontiac G5 and G6 is $500. I just bought my wife a new Enclave with a sticker of $43,650. That's only $1,600 over invoice, just under 4% profit for the dealer. The Pontiac dealer said the lower margins are actually hurting the retail side because the customer says "you're lying. I know you have more room than that".

It's a chicken and egg situation. If the dealer stops haggling will the customer stop asking? Or will one dealer stop haggling and the customer leave and find a dealer that will cut $100? The first dealer doesn't want to take that chance so he'll cut $200. See the circle?

145

sarge33rd
ID: 99331714
Tue, Dec 18, 2007, 18:47

Knowing whats coming next......I'l pre-empt it by saying this first:

Hold-back IS NOT PROFIT.

146

DealerCompliance
ID: 351123160
Tue, Dec 18, 2007, 18:49

143/sarge: You want to kick tires, do it on a day when the salesman arent there.

When I locked up the lot on Sat. I would put a business card under each wiper for the tire kickers that came by on Sun. Sold a lot of cars doing that. Funny how no one but me volunteered to lock the line on Sat.

147

MCDealer
ID: 4011291810
Tue, Dec 18, 2007, 19:00

Just for the record, please don't take the sporadic nature of my posts to mean I'm not interested in the conversation. Like I'm sure most of you are, I'm at work......and short-handed today to boot.

148

DealerCompliance
ID: 351123160
Tue, Dec 18, 2007, 19:05

Just found this on the FoxNews website. Fits in with this discussion.

Personal Responsibility is Being Banned in America

This isn't about banning cupcakes in school. This is about banning personal responsibility in America.

Don't you see what's going on here? You can't take care of yourself. Let the food police take care of yourself for you.

You can't control your kids' weight. Let the government control their weight for you.

You can't read the paperwork on a subprime mortgage you suddenly can't pay, let the government pay it for you.

You can't find a level playing field with the rich? Let the government tax them more and level it for you.

See a trend here? I do.

We're stupid. We're fat. We're lazy. We're clueless.

And the government is coming in to make things right.

Some of us welcome the help. I fear it. And here's why.

Good intentions come at a cost, my friends. I'm not talking about the cost in dollars. I'm talking about the cost in dignity.

Because this nanny state costs us our freedom, our self respect, our very being. They don't tell you that when they help you.

You only see it after the fact, when they own you.
Neil Cavuto
Common Sense

150

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 19:29

Please clarify 125. This is really confusing to me. I'll stipulate your stats are accurate. Let's say 100 people walk into the dealership. This means 90 will buy a car within 3 days, but 86% will walk off the lot and not come back.

So, you sell 14 cars today = 76 other "buyers" are buying cars somewhere because we have established they will buy. So, since they don't come back to your lot, they are buying at your competitors.

Now, you competitors all have the same stats more or less, right? So, they each let 74 "buyers" walk. Some, by pure odds will walk into your lot and fulfill their car needs. For gawd's sake, if I let 74% of qualified customers walk out of my office, I'd be fired 73 x over.

Far be it from me to tell the seasoned car guys how to do their job, but don't let a customer abuse your time, but I'd want those guys coming back and I'd be nice to them... not tell them to kick tires on Sat. Eh, maybe I'm a different bird. you guys obviously know the business and there must not be a need for a change, eh?

I still can't fathom how anyone in sales can not allow a customer time to make a decision else I won't help you. It's not all about price or "today" I want to see the other brands, who has the best options, widest variety. When I bought my last car, I was honest and straightforward about my intension, but if that guy was going to tell me I couldn't demo ride the Navigators without giving him a "I'm ready" then I'd find the next guy who would. What on earth are you going to say to me to make me by the Navigator today and preclude my even test driving the Escalade? Are you kidding?

Ok, forget my experience..... what about those math numbers above? SOMEONE is selling those "be-backs" a car.... by sarge's on stats. 74 people getting new Chevy's this weekend!

151

rockafellerskank
Dude
ID: 27652109
Tue, Dec 18, 2007, 19:32

And, I bought my last car on Sunday morning. On that day and every day i have taken it in for service, I see 4,5,6,7 sales guys standing around talking to each other. Why not be nice to that tire kicker? Isn't that more productive than trading stories with the otehr sales guys. I'd rather be at the plate and strike out than sit at my desk doing the crossword puzzle cause the tire kicker wanted a "number"

152

sarge33rd
ID: 76442923
Tue, Dec 18, 2007, 21:33

Little "history:...

Dec 1997, sarge takes a job selling cars. Never done that before but figured I'd sold just about everything else there was to sell. Knew I absolutely abhorred that pushy car salesman who asked what he had to do to get me to buy the car today...so I was adamant that I wasnt going to be like that. Nope, I'd be the "good guy" car salesman, and people would respect that and I'd make good money. So, why not try this? Cant be THAT hard.

End of Dec, sarge had sold 3 cars. Had 4 to his credit, cause one of my managers sold a car and gave me the deal. Got a paycheck for a little less than $900. Now, sarge knows everything, but sarge didnt know WTF he was doing wrong. He also knew, he was a better gddmn salesman than what his numbers said he was. So, I sat down with my Sales Manager and asked him...."WTF am I doing wrong?"

Sales Manager laughed and told me that he could tell me exactly what I was doing wrong. BUT, after working with me for a month, he knew I would just blow him off thinking...yea right, you dont know sh*t. So, I gave you the tools to figure it out for yourself, but I'll help you. Did you keep that spiral notebook of everyone you talked to all month like I said to at the beginning of the month?

Yep.

OK, call every name in that book that didnt buy from you and ask them if they are still looking. If not, when did they buy and why did they buy what they did.

Some 80 or 90 or so names in that book. Took awhile to get hold of everyone. But I did it. Went back to Sales Manager...

OK, something like 80% of them bought within 3 or 4 days. Some 40% or so, bought that SAME day. Almost everyone of them, when I asked why they bought what they did and why they didnt come back and give me another shot like we had talked about, said the same thing. "This other guy asked us what they had to do for us to buy today...we told him...they did it...so we sorta felt compelled to buy the car.

I decided to change my approach. In January 1998, I sold 17 cars and was the Nr2 salesman in the store. At the end of January, I decided that since being the type of car salesman I hated was working so well...lets try being the REALLY strong closer car salesman that I TRULY found to be disgusting.

By Feb 14th, I had sold 15 cars, and got promoted to F&I.

So you see...the American consumer, is sorta like the American voter. The American voter says they dont like mud-slinging in campaigning...and then they vote for the one who flings the most muck. Then, cant figure out why even MORE muck gets slung in the next campaign. Well, the American consumer says they dont like pushy car salesman, and then they dont buy from the guy who doesnt push and do buy from the guy who pushes hardest. Given that simple truism, what would YOU do, if it was how you were going to feed YOUR family?

153

DealerCompliance
ID: 351123160
Tue, Dec 18, 2007, 22:23

Can't be explained any better. I've had the same experience but I only sold 2 cars the first month.

However, the 'buy today' discussion is not the first thing out of a salesperson's mouth. That happens once the price negotiation stalls. However, by this time, the customer and salesperson have already invested several hours into the relationship. If, as a salesperson, you ask the correct questions, in the correct order, during the vehicle selection, you can determine how serious the customer is without having to invest more time when they are truly not ready to buy.

How you determine that is a result of the quality of the training you receive and your own intelligence.

154

DealerCompliance
ID: 351123160
Tue, Dec 18, 2007, 22:30

to add to 153.

As it's been stated, a vehicle purchase is the second biggest purchase and the truly dilligent consumer will want to evaluate all options before making a decision.

Someone may be ready to buy 'today' and they have left the house with a shopping list and different cars they want to compare. The first, and even second, dealer will not get the sale as the consumer wants to compare other cars. The last dealer of the day gets the sale.

I have had customers come back...and believe me I was very excited seeing these customers come back (and knew they were ready to buy and held the line on price)...but the majority of them do not return. It's a common understanding, the first customer on the lot (esp. on Sat.) is a waste of time because they have a full day ahead of them. Now, the customer that pulls in at 5PM and has several brochures in the back seat...SOLD DEAL!

155

DWetzel
ID: 45301312
Tue, Dec 18, 2007, 23:42

Re: 142--of COURSE you can discriminate based on income. You saying you are required to sell a homeless bum a Mercedes if they want one? There are a lot of things you can't discriminate based on, but ability to pay for the product you are selling is most certainly NOT included in that category.

Re: the "tire kicker" thread of conversation--essentially what I am hearing is that you think it not worth your time to talk to a customer if they aren't ready to buy your product RIGHTNOW. I have to believe that that is a shortsighted philosophy. Your experiences tell you differently, of course.

My question to you car salesmen is this: when shopping for other large ticket items (ranging from a house or apartment to major electronics, etc.)--what gets you to buy something? Is it a high pressure sales tactic? Is it solely price? Is it a combination of price and service? Whatever your answer, if it's anything different than the way you go about YOUR business... why do you think it's appropriate in car sales and not in those other sales areas?

156

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 00:05

155/DW: boy, you really do take things out of context don't you?

If a homeless bum walked in with $80k in cash, yes he could buy a Mercedes. But if that homeless bum walked in with no money...how much attention do you think he would get?

Can I ask you a question? If, during your normal day, you had multiple potential customers arrive to evaluate the product you were selling, you would want to show everyone the product with the best of your ability and knowledge...correct? What if you went through this same presentation multiple times, multiple days and always heard the same "thanks, we'll be back" comment only to never see these potential customers again? Say you did this 10 times a day and only 1 of these potential customers turned into a client? Then you find out, with no disrespect to your presentation, the other 9 bought from your competition. Now go back to work tomorrow.

You would develop a better investigative technique in order to figure out which of these potential customers were ready to buy what you are presenting, from you, today. Wouldn't you? That way you can eliminate the ones you KNOW are going to continue no matter how good your product, how great your presentation and how valuable your offer. You give them information, hope they return and then follow up only to find out they purchased from someone else. Eventually, you develop an 'eye' for the buyers. If you spend more time with the buyers that 'will take it home today' you spend less time with the shoppers.

You make more money and spend less time with the potential customers that would have never become clients in the first place.

Welcome to the world of car sales.

157

DWetzel
ID: 45301312
Wed, Dec 19, 2007, 00:05

"Someone may be ready to buy 'today' and they have left the house with a shopping list and different cars they want to compare. The first, and even second, dealer will not get the sale as the consumer wants to compare other cars. The last dealer of the day gets the sale.

I have had customers come back...and believe me I was very excited seeing these customers come back (and knew they were ready to buy and held the line on price)...but the majority of them do not return."

A few thoughts on this:

1. If the first (or second) dealer is willing to make a deal that the other dealers aren't willing to match, and is willing to honor that deal for more than the ten minutes the customer is on his lot, then yes, he will get that sale from a consumer that knows what they want and will buy it for the best price they can get. If I go shopping for a DVD player, and the first place I go it's $75, and I check out two other stores where the same model is $85 and $90... where do you think I'm going to buy it?

2. Perhaps the majority of customers that left your lot, never come back. One of two things is the case then: either a. you are ticking off your customers more than anyone else (which I doubt is the case), or b. the same thing happens to everyone else. If I go to five car dealers scouting for a particular car, pretty much by definition that is going to leave four disappointed car dealers. And if I don't do that, as a consumer, I'm an idiot.

158

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 00:31

Here's an example of my personal experience.

Right after I got married we were looking for an SUV and looked at many. I was in temporary leave from the auto industry and didn't have any contacts so we went looking at several dealerships.

One SUV we drove we loved more than the others but, after careful consideration, it was out of our price range. Not what we could afford but what we wanted to spend. The sales guy was an easy going, down to earth, quality type of person. One of the guys that, as a neighbor, you would say, "man, that's the nicest guy in the world." We bought a different SUV from a different dealership based only on price.

Fast forward 8 years. We're back in the market for another SUV but now we could afford more of a payment. The original dealership we visited is now my client and, feeling a loyatly for my clients, that's where I start. We stop by, on a whim, on a Sat. to look at the new models and inquire on whether Jim is still there. He remembered us and it was like a meeting of old friends...it really was. He was very shocked we remembered him and was flattered we came back to see him.

We looked, we drove, etc. The only reason we didn't make a deal was 1) they didn't have the exact model my wife wanted and 2) the used car manager was not there to value our trade (very important since I knew I had negative equity and wanted the best $ I could get). Well, now my wife has the bug and wanted to keep looking.

We travel to another dealership, same brand of vehicle, same dealership group, still my customer. We find what she is looking for and there is a comfortable level of trust because they know who I am...and they're straight guys.

We made a deal with the 2nd dealership. Why? Because they asked for the sale...Jim did not. He wanted to wait for the manager to come in on Mon. instead of making a phone call to get the trade value. Jim didn't have the model we wanted but the other store in his group did. He could have made the dealer trade and gotten us what we wanted but didn't make the effor to 'ask for the sale'.

The guys at the 2nd store, after realizing we were serious about a purchase, asked "what would it take".

My wife and I were discussing the options in the parking lot...and discussing Jim...and she, not me, she said, "couldn't Jim have gotten this transferred to his store if he wanted to sell it to us? Let's buy it from these guys because they seem to really want to sell it. I don't want to wait until Monday."

They asked for the sale and got it.

That, my friend, is why you ask "what will it take" when you know you have a buyer in front of you.

159

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 00:43

DW: First, my post 158 was being typed as you posted 157 so I did not see that.

Now, your comment in 157: "And if I don't do that, as a consumer, I'm an idiot."

That is exactly the point! You, and me, as a consumer should make an informed decision before a major purchase.

So let's look at this from the consumer, and I'm talking about the car purchase...not a $75 piece of electronics.

You/me go to the first dealership..blah, blah...I'll be back. Second dealership..blah, blah...I'll be back. Now you/me are at the end of the day...tired...stressed...saying to ourself "why is it this hard".

Next dealership...blah, blah...everything is the same as the others.

Salesperson asks: "what can we do?"
You/me respond: "well, the other guy said this and that."
Salesperson: "So, if I can do this and that, will you take it home today?"
You/me respond: "Show me."

Salesperson shows you.

Now. Are you going to go all the way back to the 1st dealer (after a long day of shopping) because you feel some sort of loyalty to the 1st salesperson? No. (read 158) You are going to say "let's do the deal" because you've been running around all day...you're tired and want to go home with your new car and it's the same deal you would have had at 9AM that morning but you are now sitting in a different dealership.

Doesn't matter to you/me...we got the deal and car we wanted.

161

weykool
Leader
ID: 41750315
Wed, Dec 19, 2007, 04:06

Hold-back IS NOT PROFIT.

I'll bite......if it isnt profit then what is it?

To say that dealers operate on a 2-3% margin is a little misleading.
A dealer invests 5 million to buy a dealership.
Secures finanacing from the manufacturer to be able to have a 10 million inventory.
The dealer uses the 5 million to have 1 million in parts inventory and 3 million in used vehicles.
The dealer has 200 million in sales.
Using 2-3% on sales the dealer nets 4-6 million net profit.
Having a 5 million investment that returns 100% seems like a decent enough reason to own a dealership.

162

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 07:15

weykool: see 121 for dealership sales & profit data. Avg. dealer is 31M in sales, not 200M and it's 500K in profit, not 5M.

And operating margin is diffent that return on investment.

163

sarge33rd
ID: 76442923
Wed, Dec 19, 2007, 09:09

Holdback, is essentially a rebate of part of the floorp[lan interest paid by the dealership. New cars are not owned by the dealer. They are borrowed from the manufacturer and the dealership pays commercial interest on those cars. In the days prior to holdback, the manufacturers would annually write a check to the dealerships, for a portion of the interest paid all year, and the per centage of the rebate varied according to sales volume. Then, someone got the bright idea of allowing the dealers to simply "holdback", their rebate portion on a per vehicle basis when they submitted payment after selling the car. So, if my store pays floorplan of $1,000,000 and I get a holdback of $300,000...thats not 300k profit. Its a 300k reduction of a 1 million dollar expense, leaving me with a 700,000 expense. THAT, is what holdback is.

164

sarge33rd
ID: 76442923
Wed, Dec 19, 2007, 09:11

and FTR, it doesnt take 5 mill to get a dealership....more like 10 million plus. And thats just the up front investment. Operating expenses (monthly out go) amounts to an obscene number.

165

weykool
Leader
ID: 41750315
Wed, Dec 19, 2007, 10:36

You cant have it botgh ways.
The 10 million would be for one of the dealerships that would have 200 million or more in sales.
The dealerships that drag the average down to 31 million in sales could be purchased for 1-2 million.
However you want to think of holdback is up to you but if you sell used cars and make another 200K in GP and you then say ....that isnt profit I am only reducing my expenses it has the same affect on the bottom line.
Most dealers show the holdback in the GP section of the financial statement.
Looks like profit, Quacks like profit....must be...Interest....ya thats it ...interest.

166

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 10:38

Can I break this down and ask 1 very simple question? I'm not trying to be inflammatory, it's just a question I've always wanted to ask. Anyone.... At least one of you has some money, if you can afford a 50+K car. So......My question is.... Do YOU work for free????? Or do you expect to get paid for whatever it is that you do? For instance, if you're a computer IT guy, then you know something that I do not. If I call you, and you come to my home or business, do you not expect to be paid for your time and knowledge? Of course you do. So tell me. Why is YOUR time and YOUR knowledge more valuable than mine? You expect to get paid for what you do. Why am I evil because I desire the same?

167

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 10:46

No weykool. W/O 10 mill plus, you cant get a new car domestic franchise. W/O something on the order of 25 mill plus, you're not getting a high-line foreign dealership. I dont know what it takes to get a Hyundai/Kia sort of store. It has nothing to do with "having it both ways". It has to do with minimal requirements before the manufacturer will even CONSIDER granting you a franchise.

168

weykool
Leader
ID: 41750315
Wed, Dec 19, 2007, 10:47

#166.
Very simple.
If you say you charge $100.00 per hour "out the door" and then hand me a bill for traveling charges, job set up fees, education surcharge, and advertising rebate......you will earn the same disdain we have for car dealers.

169

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 10:48

Re 166...They dont care if oyu get paid or not. They dont care if the waitress makes decent tip money or not. Just so long as it doesnt come FROM thjeir pockets, they dont givbe a rats-ass. Of course, if they send you a bill, they expect you to empty your pockets though. But then...thats different.

170

weykool
Leader
ID: 41750315
Wed, Dec 19, 2007, 10:49

Sarge:
If you get a high line foreign dealership and only do 34 million in sales....gues what.....you just lost your 10 million.

171

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 10:51

"Most dealers show the holdback in the GP section of the financial statement."

Wrong. In 3 dealerships in 6 years, and as the GM at my current gig, I have never, not once, in ANY of these dealerships seen holdback put in the GP section. It isn't. Sarge is correct, holdback is interest.

172

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 10:53

Not even close to true weykool. In fact, your post 170 is as innaccurate as any post I've ever seen on this forum. $34,000,000 in sales divided by 100,000 ea for cars = 340 units sold. Many high-line dealerships NOT in CA or Miami, would kill to sell 30 cars/month. (Or even 25/m, which at 100k ea would amount to 25 million, leaving 9 million to have come from other departments.)

173

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 11:01

Show me how many dealers are selling 200M and I'll show you 1000 that are not. It's attitudes like this, "all the dealer's are making tons of money", that create misgivings against the industry and, quite honestly, are socialistic in nature. "Oh, you make more so you should cut your profit because that's not fair to the rest of us."

There were 21,200 franchise dealers as of end of 2006. 16% of them sold 0-149 cars annually. 26% sold 150-399. 28% sold 400-749. 30% sold over 750. The average dealer in a metro market will be around 100-150 per month.

There is a large Toyota dealer here that averages 400 total a month. Around 250 new and 150 used. This is around 138M. Add service revenue, etc. and they would be around 150M but they still operate on the same overall margin. Is that still a lot of money? Yes but it's still 2-3%! And this one is only 1 of 148 in town and there is NO WAY you could buy/start/run that business on 10M. The others are not doing those numbers. One of the largest GM dealer's goal is 1000 annually (about 90/month). That's roughly 28M...add service, etc. and they are doing 35M.

That's like saying every retailer is doing a billion dollars because there is 1 wal mart. It's absurd.

I suggest you do your homework before lumping every dealer into the same category and revenue/profit range.

Here is the NADA data on the volume numbers.
sales by dealer

174

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 11:10

Re: 166.

Of course I expect to get paid, but if I don't get paid what I believe my services are worth, I leave my employer. I don't complain that the customer doesn't pay us enough or wastes my time. If that's the environment, I compete within it or exit. If I'm happy with what i have invested (time and energy) VS. what I got (salary/commission) then I stay.

I, too, do not be inflammatory, but at the risk of generalization, I hear:

Car Guys: "Poor us, there are no profits and consumer lie, and regulators are unreasonable, and customer waste our time, and I work too long for too little" My response" Leave if you are unhappy"

Consumer: "The car guys cheat, and I dpn't trust them, and I want to kick tires and think about it before I purchase" My response: "Get educated and treat them with respect and be reasonable"

Now, disagree with me or not. I cannot think of an industry involving customer relations where the 2 sides are so pitted against each other from the start. One side is gonna have to change, else there perceptions will continue.

175

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 11:12

re: 168 I have NEVER, in 6 years given someone an OTD price and then added to it.

And just so you know, you're paying those fees at Wal-Mart too. They are just governed by different laws and don't have to disclose them. Do you really, truly believe that the manufacturers ship us the new units free of charge? Do you think I don't have to pay my mechanic to put them together?

Go to Toys-R-Us and look at some of the larger toys where assembly is required. If you buy it in the box, it's one price. If you buy it assembled, it's higher. Simple truth. Shipping companies do not ship stuff for free out of the kindness of their hearts, and mechanics don't put stuff together for free.

176

katietx
ID: 4911141721
Wed, Dec 19, 2007, 11:14

Katie, I'm a little confused about your post. As far as the 'range', are you speaking of the range of the bank's acceptable credit score or the 'range' of available credit scores in which a consumer's score can fall?

I was speaking of the range of the bank's (or creditor's) acceptable scores.

Second, the customer does not leave with the adverse action notice and they do not call the bureaus to find out why they were declined.

Yes, they do. I'm a banker at a major US bank and the consumer does indeed leave with with the adverse action notice that lists the phone numbers for the 3 bureaus. They are urged to call the bureaus by us. In the case of an equity loan application, the consumer is given the reason (by our bank) for the decline, whether it is a lower than acceptable FICO score, or a high DTI, we do disclose this info to them. We cannot, however, give them a hard copy of their credit report.

The letter states the factors that were unacceptable to the bank. The consumer is afforded a free copy of their report (without score) to see what is on their report to dispute anything they feel is incorrect (FACT ACT of 2003) but they do not ask the bureau why they were declined...that's the bank's decision.

In regard to the above paragraph, that may be the regulations as far as dealerships are concerned. When I worked in a dealership, I was "back office" and did not deal directly with the consumer. Banking regulations do not require us to give the consumer this type of info when they are declined for a CC, however we do give this info for consumer loans.

177

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 11:14

re: 174.

Well stated Rock. Very well stated indeed.

178

weykool
Leader
ID: 41750315
Wed, Dec 19, 2007, 11:19

Once again you cant have it both ways.
Are there dealers losing money....of course.
But to cry poverty for all dealers is absurd.
The better dealers are making money and doing quite well.
I have no problem with a dealer making money and hope thay all make as much as they can.
The problem is the methods they use to make thier money.
This is a world thay have created due to their greed to make even more money.
If we tell the consumer the truth they will go to another dealer who will lie to them and that dealer will make the sale.....so lets just tell them enough lies to make the sale ourselves and we will make more money.
The reputation percieved is the reputation earned.

179

weykool
Leader
ID: 41750315
Wed, Dec 19, 2007, 11:24

Do you think I don't have to pay my mechanic to put them together?
NO.....Actually I think the dealer gets paid to pre-deliver the vehicle.
You pay the mechanic and the the manufacture pays the dealership additional profit to get the car ready for sale.

180

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 11:25

re 174...Actually, BOTH sides need to change RFS. Both have contributed to the current state of affairs, and both have to admit some culpability to this state.

re 176...The proposed legislation didnt require disclosure of an acceptable credit range. It would have required disclosure of that consumers potential range. Entirely different. Yes, in direct lending its entirely possible that a lender could/would give an AA letter to the consumer immediately. In most cases though, denial/approval isnt immediate and thus neither is the letter. In in-direct lending, there exists no mechanism for the lender to give an immediate AA letter, since the consumer hasnt been TO the lender, only the dealer.

181

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 11:27

re 179...cars come assembled. Motorcycles/ATVs come in a box. Yes, we in powersports have to assemble the vehicles, so yes; you the consumer have to pay for that assembly.

182

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 11:50

*sigh*

People "bitching" about dealer added fees. Lets compare for a moment OK? The local mall advertises "free parking" Guess what? That parking is NOT free. Everything for sale in that mall, is $.50 higher in price to pay for that parking lot out front. Yes, you pay for the advertising the mall/stores do. Its just included in the price of whatever you buy inside the mall. Yes, you pay for the freight to get it there, again, its just included in the price. Cars though? Different matter. The sale price gets negotiated so close to cost, there isnt room for all the incidental expenses in getting the car to you, so we line item add them in. Its no different from anything else you buy, its just that you're too freakin stubborn to see/admit as much. Yes, freight for a car is inlcuded on the window sticker price as a line item. When was the last time you paid MSRP for your car? You didnt...you negotiated away the profit, you negotiated away the costs, and then you get pissed when we charge something to recoup some of those costs. Well.......too damn bad. You want us to stop with line item adds? Start paying UP from invoice.

Here's a really, REALLY simple way to buy a new car, do it quickly, hassle free and get GREAT service after the sale....

walk in to your local dealer having done your homework. Know what you want, then sit with the salesperson and tell them straight-up:

"Look, I'm going to make you an offer. You have to take it to your Sales Manager and I understand that. I also know, that he's going to ask you if you think I can be "bumped" $50 or $100. I can not. I'm offering invoice plus 2%. If he comes back with ANY response other than 'sold', I'm walking out the door and no, I will not turn around when he comes running behind me. You tell him that. You tell him...My customer knows exactly what he wants, and what he'll pay for it. His offer, is invoice plus 2%, plus tax, title, license. No prep charges, no freight charges, no advertising charges. You get one shot. You say 'yes'; and we have a sale. You say anything else, and my customer says he'll walk."

Try that....it'll take you FAR less time to buy a car, far less hassle, far less grief, and you'll find that salesman approaching and greeting you the next time you walk through the doors to that store, instead of trying to hide from you, cause you're a bigger pain in his ass than the commission check was worth.

183

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 11:53

btw...that wont work for motorcycles. Bikes, are MSRP plus frt, plus prep, plus TTL...period.

184

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 12:06

I find "sales" very interesting as an industry (I am in sales BTW). There's so much conversation here about price. When I bought my home, price was an issue, but more when into the decision that cost. I could not have been price closed had other factors not been acceptable. Car... same thing. If I don't like the car, I wasn't buying it even for $2k, 3K less. Can't price close me. Same was true of the last major appliance (Plasma TV). I didn't buy the one that was the "best deal", i bought the one that best balanced the features I wanted against the cost.

Again, not to me inflammatory, but from a sales philosophy POV, I see price-closing as a week salesman's tool. To be fair, do any of you consumer/car buyers posting here care about ANYTHING except price? Sometime to get what you want costs $50 more.

185

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 12:26

Agreed entirely RFS. Price by itself, shoud be (and needs to be) a part of the equation. But when it comes to car buyers? My experience tells me that price is damn near everything. Here's the 'why' behind it (at least IMHO):

Assume for a moment you're looking to buy a new Ford. Something I had to wrap my brain around when I first got into this business...Chevy? Thats not the Ford stores competitor. Ford buyres, buy Ford...period. Chevy buyers, buy Chevy...period. Nope, your competitor, is that other Ford store 15 miles down the road. You both have the exact same car for sale. Only difference? Two of them...the VIN is different and the people are different. Thats it. Thats why...price is everything. If you're going to buy a Taurus...then you're going to buy a Taurus and thats that. Now, are there exceptions? Of course. But again, we dont make our living off that 10% or so that are the exception. Car salesman, play the percentages, perhaps as well as no one else outside of a world class poker player. SOme consumers, who do indeed fit into that 10% bracket, want the entire process altered to fit them. Aint gonna happen. Why? Because its a bad bet. How many here, would go "all in" and try to draw to an inside straight? THAT, is what the 10% consumer represents statistically. An inside straight. You cannot change the procedures/process, to accomodate the longshot.

186

weykool
ID: 2842717
Wed, Dec 19, 2007, 12:31

Finally something we can agree upon....both sides are copable.
I have no problem personally negotiating a car dealer with a dealership because I understand the ground rules.
If you dont like the ground rules do as Sarge suggests.
Walk into the dealership with enough cash and offer the MSRP shown on the window and you will be in and out very quickly.
No waiting for financing, no credit checks, maybe your name address and phone number (and another IRS form but that is a different topic)
Tell them upfront if you want a warranty or not and that you will walk if they try to sell you any additional add-ons.
They would think twice about trying to sell you something else out of fear of losing the deal.

Both sides have had an equal hand in creating these ground rules.
Both sides need to change how they do business or stop bitching about the rules.
Stop asking the other side to change.

The interesting thing about car buying is that generally the more profit the dealer makes on the vehicle the the happier the consumer is about the purchase.
I'm sure Sarge can attest to this but I would bet his most unhappy customers are the ones that the delership made a razor thin margin or sold at a loss.

187

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 12:38

Tell them upfront if you want a warranty or not and that you will walk if they try to sell you any additional add-ons.
They would think twice about trying to sell you something else out of fear of losing the deal.

Again...not true. Under Federal decisions, we HAVE to present product to every consumer. Whether you tell us you dont want to hear it or not. Why? Cadillac dealer in Wisc lost a lawsuit. Couple came in and financed a new Caddy. Didnt buy Cdt Life/Health. Husband died before the first payment was due, and the widow came in to file a life insurance claim. Dealer told her they didnt buy Cdt Ins. Widow said they always buy it. Went to court. Dealer couldnt prove it was offered, so they lost. Dealer had to payoff the new Caddy. Now, if you DONT want to buy something? You have to sign a waiver, saying it was offered/explained and you decline it. No waiver, no proof, dealer is liable.

The interesting thing about car buying is that generally the more profit the dealer makes on the vehicle the the happier the consumer is about the purchase.
I'm sure Sarge can attest to this but I would bet his most unhappy customers are the ones that the delership made a razor thin margin or sold at a loss.

THAT, is the most ironically true thing in this business. And I have seen it, time and time and time again.

188

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 12:41

and one other thing...the finance buyer, generally gets a better deal than the cash buyer. Why? We get cash anyway. Whether its out of your pocket, a bank draft or an installment contract with FMCC. We have cash tomorrow regardless. And we get paid on that loan, so we make more money on a finance deal, so you can get a better price or "throw ins". Dont for a minute, think that walking in with a pre-approval from an outside source, gets you a better deal. THAT, is another of the publics erroneous misconceptions.

189

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 13:27

"Go to Toys-R-Us and look at some of the larger toys where assembly is required. If you buy it in the box, it's one price. If you buy it assembled, it's higher. Simple truth. Shipping companies do not ship stuff for free out of the kindness of their hearts, and mechanics don't put stuff together for free."

You know what? That's fine. We do sincerely understand that you have to pay mechanics to put the product together. But, if EVERY SINGLE PRODUCT YOU HAVE needs to be put together by your mechanic... you know how long it takes your mechanic to put it together, right? You know how much you have to pay him? You know for a fact that you are going to have to have him put that bike together? (Notwithstanding what I would guess is the small minority of your buyers who may actually buy it in the box and put it together themselves, in which case some adjustment MIGHT be in order--but rather than work with that 5% of buyers, who probably know more about the business than most to start with, you choose to mess with the other 95%).

So, you know your cost for the assembly, you know that the vast majority of your customers will require it to be assembled.... just lump it into the price, for crying out loud.

Dealer prep? What's that? If I give you the wad of cash now, and you hand me the keys, I don't need any prep. I don't see the grocery store charging me an extra 3 cents an orange to have the stockboy come by every three hours and arrange them into a nice pile. It's part of the normal expenses of the operation.

Same thing with freight. I'm guessing it costs "X" for you to get the bike shipped, and that "X" is reasonably constant over time (or at least predictable). If you are ordering an item that isn't in stock, I can understand paying a shipping cost. But if you have the item sitting in your store, then I as the consumer ought to have that price factored in. If you have to have it delivered to my house, I expect to pay for that but I expect the cost to be non-negotiable. You know how long it takes your delivery guys to get there and set it up.

Advertising? That's your normal cost of business. I don't give a damn how much you pay the local newspaper for that nice Sunday ad, or how much it costs to rent the elephants for that highly amusing commercial. I shouldn't have to pay for that--you make an economic decision that spending that money on advertising will bring in more customers. By the same token, why not toss on a "utilities" fee for the parking lot lights, or the "office supplies" fee for the ballpoint pen that you know I'm going to walk out with?

Basically, the dealer knows their costs on every single item imaginable, or can estimate these to a pretty good degree of certainty. Figure out what those costs are, add on a reasonable profit margin that makes sure you stay in business, make a good amount of money, and keeps your competitors from too badly undercutting you, and go from there.

It's the normal operation of basically every other manufacture/sales model in existence. There's no logical reason, except for the stubbornness of car dealers and the stubborn expectations of car buyers (I would liken their situation to pushing against stiff headwind, then suddenly having the wind stop--you can't just upright yourself overnight), that it can't work.

190

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 13:33

Trust me DW, we'd love to. But the dealer down the road will quote a price NOT including those charges, beat us and then the buyer goes there instead of here. (And bikes cannot be sold 'in the box'. It would void the warranty and leave the dealer open to ALL kinds of lawsuits/liabililty issues.)

191

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 13:34

AAAARRRRRRGHHHHHH!

Customer comes in with wife last month. They already have a credit limit of 7500.00. They have a trade that they're upside down in by almost 4K. I apply for an increase and get another 1K, so now I have 8500. Still not enough to get the customer the bike he wants. I need 10K to make this deal happen, even with their $$$ down. Can't get it then, their DTI is way out of wack. He comes back in today, has paid lots of bills, and that has been updated on the credit report. I get the 10K.

Yipeee!!!! Done deal, right? Nope. Wife isn't here with him this trip and now, even though she knew they had to put $$$ down, she's decided that she doesn't want to anymore. So now, I need 12K instead of the 10K I just begged for and finally got.

Synopsis.... I just spent all morning on the phone begging my lender for help to give my customer exactly what they said they wanted.....got it for them.....and now they want more.

Just another day at the office.......

And before I get blasted.....Yes, that is indeed part of sales, and I actually do love my job. You win some, you loose some. This is just the kind of thing though that makes us cynical.

192

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 13:36

"Car salesman, play the percentages, perhaps as well as no one else outside of a world class poker player. SOme consumers, who do indeed fit into that 10% bracket, want the entire process altered to fit them. Aint gonna happen. Why? Because its a bad bet. How many here, would go "all in" and try to draw to an inside straight? THAT, is what the 10% consumer represents statistically. An inside straight. You cannot change the procedures/process, to accomodate the longshot."

If I had to put $10 into a $500 pot, I'd gladly draw to that inside straight rather than choosing to muck my hand before the river. The ONLY cost to the dealer and the salesman is the time that he is spending with the customer, and the opportunity cost of not spending that time with someone else.

I fully understand that if there's one car salesman and two customers on the lot, that salesman has to figure out who he has a better chance of selling to. But if there's two salesmen and one customer, one of those salesmen should be trying to be as helpful as they possibly can--in that case, the salesman is basically getting a free card, and they certainly ought to be taking it.

193

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 13:38

Dont know why I didnt just mention this in my above post:

Classic example just the other day DW: Mom and Dau paying cash for a new bike. They had called a Honda Dealer in Austin and gotten the sale price of the bike and the "Out the door" price. Then they called us and our OTD was lower so in they came. I prepped the paperwork, brought them in and went over the deal. Mom...had a FIT! Our sale price (Line 1) was higher than the store in Austin, yet our oTD was lower. She was going to go to AUstin, because "They were selling the bike for less." Sure were, and charging substantially more for frt and prep! So much more (About $400 more in fact), that the OTD price there was higher than the OTD price here. Took myself, my Sales Manager AND her daughter...about 45 minutes to convince her, that the line 1 price wasnt material. It was the bottom line price, the amount she had to write the check for, that mattered.

THAT my friend, is the mentality we deal with every day of every week of every month.

194

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 13:38

RE 189:

A dealer can not give the customer the unit in the crate. It's a violation of the dealer agreement. Period.

195

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 13:39

Just another random thought or few. ;) Dealers create a lot of their own scenarios you (sales) are complaining about.

Ever hear a radio ad that says "bring in your best offer and we'll beat it or give you a free __(insert item here)__?" Um, hello, McFly, they are encouraging us to as for the number to take home. Don't blame us when we do what you are asking us to do.

Ever see a print add for a truck for $10,999 with 0% APR only to find out they had one of them and now that they have you here, wanna look at the $14k truck? (Light bait and switch in IMO, but not illegal, technically).

Ever hear of a "President's Day Sale"? C'mon.... I can but the same car for the same dollars 5 days before Abe's birthday as i can 5 days after it. So, if I am there on this day, don't insult me with "today's" price. I'm smarter than that.

These ads just help set up the negotiation environment. Of course, you will tell me you have to use these tactics because the other guy is..., but you practically beg us to come in asking for the number!

196

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 13:43

In theoery, 192 holds merit...in practice, it does not. Why> Sell the car with insufficient gross profit, and the salesman gets paid a "mini". Typically $50 to $100. I am NOT spending 4 hours with oyu, to sell a car for $30k and make $75. AINT---GONNA---HAPPEN. The average car salesman, sells 8 cars/month plus an odd deal every 6 months. 98 cars/yr. Thats the national average. They cannot afford, to sell cars and make $100 on each one. So, if you're one of those 10%'ers...better get used to being shunned. You're not worth the salesmans time, and thats the bottom line.

197

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 13:47

"Trust me DW, we'd love to. But the dealer down the road will quote a price NOT including those charges, beat us and then the buyer goes there instead of here."

In other words, the dealer is willing to accept a lower profit margin on the car than you were. That's no different than going to Circuit City instead of Best Buy because the Sony 42" HDTV costs $899 there instead of $949. That's what is SUPPOSED to happen in the marketplace.

If you quoted the customer an "everything in" price that is lower than what the other guy will do, where do you think the customer is going to buy the car?

And more importantly, perhaps, where do you think the customer will be happier (and thus possibly generate future business for you)? Where the cost is $9500 plus tax/title/license, or where it's $8700 + $400 assembly cost + $250 dealer prep + $100 shoeshine fee + $50 advertising costs + tax/title/license, when the price shown on the bike in the lot was $8700*?

I understand that the "other guy" might try to sell the customer something for less than you will. It doesn't exactly break my heart, and it goes both ways I'm sure. (I'm sure, as I drip with sarcasm, that you would never tell a customer that said "I can get that car for $9500 at Joe's" that you would sell him the same car at $9450. I'm sure you have nevr benefitted from that.)

Your job as a salesman shouldn't be to get me to not go behind the curtain--it should be to explain why (to borrow another thread) the extra $.50 that I might spend at your store instead of at Wal-Cars is worth it.

198

Tree
ID: 3533298
Wed, Dec 19, 2007, 13:48

this thread pretty much confirms most of what i've always felt about car dealers.

transparency is not a word in the world of car dealers, but subterfuge sure as hell is.

199

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 13:48

and the salesman gets paid a "mini".

That's where I part company with the car guys. Ain't the consumers fault if your boss is willing to sell and cut his own profit and your commission. You may disagree, but that's a labor issue between you and your dealership. I say, too bad you made $50. Why is that my problem? I'll find someone to write that deal. If the dealer is curring rates so bad "mini's"are the norm --- free country. Go sell real estate.

200

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 13:51

re 195...Yep. We do everything in our power, to get you onto the lot. Dont think Wally-World doesnt do everything in their power, to get you through their doors.

We COUNT on a salesmans ability to SELL vs "take an order". Salesman who cant sell, are quickly ushered out of the business. Either they leave on their own or they get sent away by management. In either case, its an economic necessity for both they and the dealership. So now what? Are you gonna fault us for trying our damndest to sell a car vs asking if you want fries with that Happy meal?

201

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 13:53

And great, you CAN'T sell the bike out of the box. That means that 100% of the time you have to assemble it. You have a fixed cost to assemble the bike. X hours of assembly at Y dollars per hour for the mechanic. (X and Y oughta be pretty much inversely proportional: if your mechanic puts the bike together more slowly, he's probably not making as much per hour as one that puts it together faster.) And it also means that the guy down the road has the same fixed cost.

So, why can't you just price that into the cost of the bike?

202

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 13:55

198..Tree...you're not ignorant, so why are you acting as if you are?

199...I'd LOVE to get 7% of the sale price. What the owner is willing to do and what the salesman are willing to do, dont always jive. The type customer you're inferring you are? Will almost always end up with the new guy in the store who doesnt know squat. The experienced guys? Know you for who you are, and wont waste their time with you. They'll let the neww kid get the mioni deal, and they know he'll be gone at the end of the month when his 65 hr work weeks grossed him $900 for the month. They also know, that the odds are HUGE in their favor, that since you're a 10%'er, the next guy on the lot wont be. SO, they keep themselves freed up for that next guy.

203

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 13:57

re 201..Federal law. Once an administrative type charge is shown on the paperwork for one customer, it has to be shown identically for EVERY customer, or we are open to discrimination lawsuits.

204

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 14:05

Re: 203..."re 201..Federal law. Once an administrative type charge is shown on the paperwork for one customer, it has to be shown identically for EVERY customer, or we are open to discrimination lawsuits."

So make a policy decision, which covers all customers from that point forward or as of a specific date. Document that decision, with roughly a one-sentence letter in your company files. Presto, no problem. Easy-peasy.

Here, I'll draft one for you right now: "Effective Jaunary 1, 2008, Sarge Motor Sales will no longer list 'assembly' as a separate charge on any new bike sales. These costs will be included in the price of the vehicle." There, that wasn't so hard. You may want to have an attorney in your area look it over, but that should cover you.

Fact is, you WANT to do things your way, because they allow you to exploit the information gap between you and the average customer in order to make more money. That's what it comes down to. And the fact is that customers are aware of that information gap, know they're being exploited because of it, and thus think car salesmen are going to try to screw them--is because it's true. This thread has made that clear.

205

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 14:08

Re: 199--and my guess is the dealer knows that if the salesman won't sell it to make $100... there will be someone right behind him. Sort of like how labor works in the rest of the known universe. If I thought I was getting particularly effective or special treatment from the dealer, I'd probably be willing to pay somewhat more for it.

206

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 14:13

re 204.....Now a customer calls to get ouor price and calls another store (which doesnt include frt and prep) in the deal. Guess where they go? Consumer lawsuits led to the practice DW. Not dealers trying to be underhanded. Dealers lost several suit through 80s and into the early 90s, trying to argue that the differences were due to differences in negotiating skills by the consumer. They lost those suits. So, now the practice has been made, set, BY those lawsuits. Dont blame us, for trying to stay out of court.

207

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 14:17

Q to the car guys: Why do you stay in this field?

Seems like it is full of bad customers, cheap bosses, long hours, unreasonable regulations, and negative consumer perceptions, financial market pressures? I can name dozens of other fields that seem more appealing.

208

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 14:20

Truth is RFS...its a "disease". This business gets into your blood and it grabs hold of youo. Its filled with highly competitive, edgey, definitive Type A personalities. Its the ultimate competition. On going, never ending, frustrating as hell and drives many of us to drink excessively and puts more than a few in an early grave through heat attacks and strokes. But...its in the blood. Either you can hack it, or you cant. There is no middle ground.

209

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 14:25

Another Q for the car guys.

Since it seems to be implied from #202 that the experienced sales guys "know" more and should be valued. Exactly, I mean exactly, what value items will this experienced sales guy know/provide that i will find valuable enough to pay for? Assume I am a consumer of average inteligence.

210

biliruben
ID: 5610442715
Wed, Dec 19, 2007, 14:27

Man, Sarge. You should have gotten into Real Estate or pumping sub-prime loans the last few years.

If you'd played it right, you could have made enough to retire.

Sell Hondas.

211

tree on the treo
ID: 40842210
Wed, Dec 19, 2007, 14:45

e 201..Federal law. Once an administrative type charge is shown on the paperwork for one customer, it has to be shown identically for EVERY customer, or we are open to discrimination lawsuits.

hence, subterfuge.

ikea charges me one price if I want to take home my furniture unassembled, and another if I want them to assemble it.

I don't buy your argument that legally its not possible to do that.

212

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 14:46

Can only speak for myself RFS:

When I sold a car, I stood up for my customer and got them freebies from service. Got the dealership to cover a tow bill for them, or got them a loaner when we didnt have any available. Any number of things. Those customers though that didnt "pay" for their car? Were lucky if I ever bothered to return their phone calls.

Take a Pizza Delivery driver for ex. Do you tip them? Do you tip them well? Trust me, they learn quickly which addresses do and which ones dont. You're one who doesnt and I have 4 deliveries to make this run? You're nr 4. I dont care HOW much longer it takes to get to you. Yours is lowest on my priority list. You want extras after the sale? That gets setup by how much you paid DURING the sale.

213

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 14:48

re 211....Tree, I dont much care if YOU "buy" it or not. You seem intent on arguing and calling me and those who do what I do thieves. So guess what pal? Read, learn or FO. I dont much care which. If you dont like the truth, that isnt my fault.

214

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 15:00

Re: 212.

So, On a $20k'ish purchase, how much difference in price would I pay between getting you and you earning a reasonable commission and the new guy earning a "mini" comm?

You implied 2% over invoice?

If the invoice is $20k, and i pay you $20,800 (4% over), or I pay the "mini" guy $20,110 ... I get you right cause I am reasonable?

So, $700 gets those services you mentioned? Um, according to #50 the chances of you being there look slim to me. The last car i bought, the "knowledgeable" sales guy was gone 2 weeks later. What do I get again? When I need a tow, who do I call?

I'll admit from a previous thread, I anticipated your answer. Pardon me, those items aren't worth $700, at least to me. Even if you put free towing / free loaner in writing, I wouldn't pay $700, maybe otehr would. Just MHO. However, if I am treated with respect, I will faithfully refer business or buy from you again in X years... assuming I can find you. ;)

I don't eat pizza anymore. Doctor said I'm too fat. You may imply that tipping the pizza guy was not an issue. ;)

215

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 15:03

re your repeat business...not to be rude RFS, but if you're initial business isnt worth my time, why would your repeat business be worth it? Referrals? "Birds of a feather" and all that? Again, if you're not worth my time, odds are, neither are your referrals. *shrug* Not meaning to be rude, just honest.

216

chode
ID: 293141514
Wed, Dec 19, 2007, 15:04

By your own account, in the past 10 years you've had 10 different car sales-related jobs. Have you ever considered that your problem might not lie with either the dealer (whether oppressive, stingy, egomaniacal ... whichever fits the gripe du jour) or the customer (same story - ignorant, demanding, cheap, spoiled ... whatever other insulting adjectives you've used), but elsewhere?

You've repeated many times in many threads how superbly good you are at the car sales business. Why have you changed jobs so often? I have a guess.

217

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 15:22

So, what value did you add to the deal again that a consumer actually wants and you will be there to deliver... not to be rude. I also knew you would say you didn't want my referral. I agree why even step up to the plate to my friend who might be a mini. Better off to do the crossword puzzle with the other 4 sales guys.

I had this same conversation with a residential real estate friend of mine. Phoenix housing was booming and full price or full price plus offers were coming in on homes within 72 hours of listing. I tried to get him to explain to me why his fees were worth $18k on a $300k home when the seller could put out a sign and hire a real estate lawyer to do the paperwork for $500. He, too, listed a bunch of items that HE thought were valuable that I as a consumer felt were not worth eighteen thousand dollars.

Another Q cause I'm feeling frisky. Do you actually tell your boss/sales manager (to quote you) "AINT---GONNA---HAPPEN" when he wants you to talk to a perceived tire kicker? (Even though we have established that 90% of them will buy within 3 days somewhere). Do actually tell your boss, you won't take a previous customer's referral call because of "birds of a feather, yada, yada..." If so, you got big ones.

218

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 15:23

WOW!
sarge33rd, MCDealer, and DealerCompliance

Your responses/complaints in this thread have done nothing but reinforce all the stereotypes you are complaining about. For your own good, I suggest you comment no further and hope this thread goes away. Unfortunately for you, it's now the 4th highest hit on Google for the subject legislation. You are not doing yourselves any favors.

219

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 15:29

By the way, I do get what value you add to the deal for the dealership. That's what I'm getting at... you add value for the owner, so the owner should add revenue to your pocket. You add very little value (IMO) to an average consumer, so you can't (well you shouldn't ) expect the consumer to pay for it. Do you think I even have an iota of a point here.... of atre you going to play the I've done this for 9 years and I have yet to be proven wrong card? .. as long as we're being honest.

220

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 15:29

206--"re 204.....Now a customer calls to get ouor price and calls another store (which doesnt include frt and prep) in the deal. Guess where they go?"

I'm going to guess, assuming the products and services are otherwise equal, "wherever is cheaper". And I'm smart enough to do the math. If your "all in" price is $10,000, and the other guy is charging $9500 plus $1,000 in addons--I'll be back to buy from you. If you were charging $11,000, well, the hassle of dealing with that other guy probably isn't worth $500. Now, if Sarge's Auto Sales has a reputation for treating their customers well, and Joe's Auto Shack doesn't, I may pay the extra $100 at Sarge's (much like you would pay an extra 50 cents for something rather than shopping at WalMart).

The problem comes when most dealerships are perceived (rightly or wrongly, but I think the history and breatdh of consumer opinion came from somewhere) as being dishonest, scheming, etc. If my choices are to buy something from WalMart or another company that acts just like them... why WOULDN'T I buy where it's cheaper?

221

tree on the treo
ID: 40842210
Wed, Dec 19, 2007, 15:32

222

walk
Dude
ID: 32928238
Wed, Dec 19, 2007, 15:38

Hi, I've tried to read through much of this very active thread. I was not initially interested cos it's about cars, and being someone who has not owned a car in 13 years (yes, I live in Manhattan...with a family, too, but it would be nice to have a car, just not worth the cost of the garage + car...), I am curious what sarge and mcdealer think of sites like cars.com and carsdirect.com...? thx.

Cars Direct

223

Tree
ID: 3533298
Wed, Dec 19, 2007, 15:41

stupid Treo...

anyway...

re 211....Tree, I dont much care if YOU "buy" it or not. You seem intent on arguing and calling me and those who do what I do thieves. So guess what pal? Read, learn or FO. I dont much care which. If you dont like the truth, that isnt my fault.

no Sarge, YOU'RE the one who apparently doesn't like the truth.

very clearly, there are several people in this thread not only expressing a distrust in dealers, and not only showing why, but even pointing how the comments of those in this business reinforce those beliefs.

and you respond with telling your potential customer to F8ck Off.

that kind of sums it up right there.

224

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 15:42

re 218:

Balrog...even rfs admits that it is both the dealer and the consumer, who have led us to where we are. Are you unable to admit the same?

re 219:

Of ocurse you have a point. But the reality of the job is what it is. Hence, if I recognize you for the 4 hr ordeal and $50 commission buyer that you are, I'm not spending my time on you. Aint gonna happen...ever.

re 221:

So open disclosure and line item revelation, is subterfuge? Furniture FTR, doesnt carry you down the highway at 70+ mph and cost you your life it it breaks. You want to buy that unassembled, you have that option. A motorcycle, is different. You do NOT, have that option there.

As for your "buying" my argument or not...as I said before. I really dont care. Its the truth. Accept it, or dont. Your position on it, has no basis on what it is. The practice, was born out of lost consumer initiated law suits. Its the solution, put forth by every single one of the 50 state Auto Dealer Association Legal Depts, and its in full compliance with all state and federal laws. SO like it, dopnt like it, it makes no difference, it isnt changing. We are NOT going to deliberately give you a reason to file a suit, just to make you happy today.

225

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 15:44

223...you're not a potential customer of mine Tree. Not in any way shape or form. I'm a liar and a thief and a cheat, remember? I've told oyu the truth, and you've called me a liar for it. So yea, FO. *shrug* No skin off my back.

226

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 15:53

Just because the current practices are an alternative that car dealers have designed to cover their own hides, does not mean those practices are "right". They may be right for the dealers, but so would a lot of other things that don't make much sense.

227

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 15:55

So, we do what we have to in order to NOT give you a reason to file suit...and you have a problem with that??????????????????

228

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 15:56

Oh, and a $50 commission for four hours of work translates to $12.50 per hour, or $2000 per month for a 40-hour work week. That's not a great income, but if that's the low end of what you do, that's pretty good. That poor guy making $900 per month for his 230 hours of work would love that I bet.

229

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 15:59

Hate to beat a dead horse, but I'd like to circle back to 2 Q's that seems to have been missed or not answered to serve my curiosity. )

1. Is there anything else besides free towing/rentals (you can't even put in writing I'd imagine, can you?!?) that makes dealing with you vs. "mini" guy worth $700 to me? Seriously, how do I even know you will be there? I'll pay $700 if I see some value. Perhaps you shoudl ask me, the customer, what I want? Hint. Hint.

2. Do you overtly tell your boss "no" when he wants to you talk to a tire kicker? or mini comm deal buyer?

I'm reminded of a recent conversation i had with the phone company. I use a cell phone exclusively. I had to install a land line for the security system, otherwise, I have to use for it. The cost is $12.95 for a stripped down, no features added line. When I ordered it, the "sales" guy for Qwest rtied to "sell" me on a package of X features bundled together that would save me $5 (now my bill would be $21.95 instead of $26.95 cause I'm saving!) I explained that those held to interest to me and asked him to write to order for 12.95. He tried 3 more times to explain to my why i should get the bundle. I finally explained to him what the line was for after saying "no" 3x and he wrote the order. My point.... all he was trained to do was price-close customers and the "value" he was adding was assumed to be universally wanted. If he has exercised some listening skills, we both would have had 90 seconds of our like back.

sarge, Thanks for engaging me in conversation, I know it seems like the form is ganging up on the sales guy. That's not my angle. I have learned, i ain't even selling cars for a living. :(

FWIW, my unsolicited advice is the public is asking for a different service and the industry should pause for a second and listen instead of finding reasons why it won't work that way

230

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 16:00

Balrog.....you're right. I for one am done attempting to explain our point of view to a bunch of folks who could obviously care less and are convince no matter what anyone here says that they are correct and we are so wrong. The ONLY one of you that's had anything even remotely intelligent to say is Rock. He has at least made an attempt, and Sarge and I have both agreed with him on certain points. The rest of you are apparently to belligerant to comprehend the very valid points we are trying to make.

Tree? I don't care whether you "buy" the argument or not about the fees. It's an absolute fact and you not liking it won't change it. You want to assemble your own furniture? Have at it. But a couch is not a motorcycle that will get you killed if it's assembled incorrectly. Not the same thing at all. It's asinine comments like that that lead Sarge to telling you to FO, and me to agree with him.

231

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 16:04

227: Sarge, you are totally missing the point. Is it deliberate?

Point me to the statute, in any state, which says that you are required to charge a customer for assembly, dealer prep, etc.

(Note that this does not mean a statute which requires the dealer to DISCLOSE those charges if they are made. These are two different things.)

Your position seems to be that it is unlawful (as established by suits) to charge a customer one price for a car, to include all the other addons. Please, point me to the appropriate laws.

232

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 16:04

It's nice to hear I'm remotely intelligent. :) Good luck sales guys. I think you have a hard job.

233

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 16:11

230: I consider myself insulted. I think I have raised a number of perfectly valid points, which you refuse to listen to. But that's okay.

Contrary to some, I don't think that the people in this thread are deliberately liars or cheats or Satan worshippers. I am genuinely curious about the culture that is evident. The comments (which I am going to take out of context, sorry in advance) is that those who "can't hack it" are somehow lesser people.

Once again we're back to the bike assembly issue. Here's our point. I'd like you as a sales person to respond to it.

You are selling me something which (you say) by law you cannot sell to me unassembled. Yet you feel it important to charge me one price for the product, and another price for the assembly. Why?

234

chode
ID: 293141514
Wed, Dec 19, 2007, 16:11

Great stuff from sarge’s F&I forum:

"He's getting his ass handed to him by a bunch of uneducated, car dealership hating, (with or without good reason, who really knows?) folks who it appears to me can't fully comprehend what it is that we do for a living." miles, Jim’s new lady friend (sorry katie)

"It's hard though, having a battle of wits with the unarmed. IMHO, truly an exercise in futility." miles

"Because once we have to disclose how much of the VSC charge we keep? We wont get more than $50 over cost after that date. Add a $50 flat for financing, and $50 from 'other' B/E, and that'll be the way it'll work." – sarge33rd
"I agree. It gives the consumer one more thing to negotiate after they've reduced f/e to $500 (if you're that lucky)." J.R. Wilson (I'm guessing MCDealer)

"I would be glad to post over there, IF I thought there was an open mind over there. WOW, what a bunch of idiots. I don't think I have ever seen a bunch of folk who simply refuse to even listen. Any time you make a point they twist it. I don't know what these people do for a living, but just from reading, I get the feeling I'm in a room full of liberal English professors in their tweed jackets, spouting the advantages of socialism."

"Really a bunch of one sided dimwits over there! ('cept Jim) As it has been said many times already 'You can't fix stupid!'"

"Those guys are idiots over there. My head hurts." J.R. Wilson

And of course, my favorite, from the sarge Jim Dirks himself: "there is an old saying in the automotive retail industry: 'Buyers are liars' ... the consumers lie to dealers on a daily basis and throughout the entire purchase process. They are coached in 'how' to do this, by countless articles more full of disinformation than any such campaign undertaken by Allied Intel services throughout WWII."

Gee, as a collective group, is it any wonder why the general consumer does not like or trust the dealership/salesman crowd? Are you generally confused by our disdain? Maybe one day you'll understand that your income and livelihoods depend on the satisfaction of the very idiots--, er, people you are (apparently) forced to "serve" and not the other way around. Then again, maybe not.

235

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 16:16

218/Balrog: sarge33rd, MCDealer, and DealerCompliance

"Your responses/complaints in this thread have done nothing but reinforce all the stereotypes you are complaining about. For your own good, I suggest you comment no further and hope this thread goes away. Unfortunately for you, it's now the 4th highest hit on Google for the subject legislation. You are not doing yourselves any favors."

There is nothing in any of my posts that I am ashamed of so why would it be unfortunate the thread is getting attention? This started as a discussion of another overreaching, unrealistic legislative bill that would have negative impact on both car dealers and consumers.

There are now multiple conversations going on about the problems in the retail auto industry, and some of these have become pretty heated.

I have contributed based on my experience when I was in retail, my experience now serving the industry and my experiences as a consumer. There are many issues, most of them incorrect 'perceptions' but in order to fix any problem, we need to have these discussions.

But if everyone continues to have a closed mind and argue so for the sake of arguing and trying to make a point, we'll find our selves further apart than when we started.

236

walk
Dude
ID: 32928238
Wed, Dec 19, 2007, 16:16

Wow, these two sides of the deal seem kinda far apart, and there so much historical animosity. Just observing. It's intense!

237

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 16:18

still in form arent you chode?

Look, a person can only beat their head against the brick wall for so long, before it either starts to chip away at the wall, or hurt like hell.

So far, it appears only rfs has even an inkling that the current state came about through mutual efforts. I'm done...you win. I quit. Enjoy.

238

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 16:21

here's a quote from me that you apparently overlooked chode:

Thats just it...those folks ARENT stupid. They're simply serving as shining examples of exactly how twisted the publics perception of US, really is. Perm Dude, is a copy-rights researcher. My-Boy-Jack, is a Prosecutor in KY, Tree is some mucka-muck big-whig in the music industry. What they all share..is the publics pure HATRED of the car biz.

239

boikin
ID: 59831214
Wed, Dec 19, 2007, 16:21

maybe i missed it as it has taken me an hour to catch up all that has been written here today but i am interested to hear from the sales people on there impression and effects of cars.com and carsdirect.com that walk brought up in post 222. and also have you found that customers are more imformed becuase of internet or have things changed little in the past 10 years?

240

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 16:22

more misinformed...yes. More informed? In some cases yes, in some no.

those websites have had little if any meaningful impact. Virtually none.

241

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 16:23

sarge I'm not saying you don't have valid points. Of course you need some protection from "bad" customers. I'm just saying you're doing more harm than good in how you are expressing your points here.

242

chode
ID: 293141514
Wed, Dec 19, 2007, 16:30

243

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 16:31

239/boikin: cars.com, carsdirect.com and edmunds.com are good research sites. I've used them multiple times when searching for a car. Adding options, looking at prices, comparisions, etc. Personally, I think they add to the consumer's knowledge when shopping for autos.

But they can create some issues when it comes to the price. carsdirect and edmunds show you the invoice price and the MSRP. carsdirect immediately tells you that you can buy at, or lower than, invoice. This, as has been clearly discussed in this thread, is a 0% profit for the dealer so they must try and make some profit somewhere else. edmunds has their 'TMV' price, which is the average price paid in your zip code. this is reflective of a fair offer to make the dealer for the vehicle.

Personally, if you're looking for a car, these sites save you a lot of time in researching the cars.

244

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 16:31

Sarge, I do understand that the consumer has a part in it. More to the point, some consumers are going to behave badly. I do understand this. Honest. Really, I do! I know some of your friends think I'm too stupid to comprehend that, but I do understand that.

I agree that it's going to take some change on the part of both parties to break out of the hostile negotiations that seem like they have to happen at a car dealership.

The fundamental problem that the consumers have when the car dealers blame the consumer for these problems is simply this: what other sales industries have these sorts of problems in dealing with their customers? Very, very few. And these customers are customers in various other fields, where they do NOT have these problems.

245

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 16:33

That Balrog, stems from our having to try and express the same point, repeatedly, in diffrent terms, because some folks take what we said and twist it into 37 other flavors.

One challenges me to show him statutes. Of what? 73 different trial decisions whwich is what led to the current policies? 90% (or more) of what is done in a dealership tody, is done to protect the store from a lawsuit. Consumers, and their attorneys, have over the past 20 or so years, turned it into this. (And I'll readily admit, that dealerships over the preceeding 20 years, led to all the consumer lawsuits of the past 20 years.)

My point, our point...is that the entire process IS transparent, in far more dealerships than those in which it isnt.

Our point is, we do what we do, they way we do, because the consumer attorneys have made it necessary.

Our point is...We'd be more than happy to be 300% open, upfront and honest about the ENTIRE process. But Federal Law wont allow it. Your various state AGs, wont allow it. YOU the consumer, wont allow it.

246

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 16:35

re 244....Thats because you dont go into your local grocer, and argue over the price of your groceries. You go in, they ring it up and you pay for it. Do that at the car lot too, and you;ll have the most pleasant experience on a car lot that you have EVER had.

247

boikin
ID: 59831214
Wed, Dec 19, 2007, 16:36

one more question, i have seen allot of discussion about customers walking away only to buy cars later because they got sold some where else, what % of customers come in and do not try hangle or only very little, either they know what they want or just do not care? i was thinking about this when reading an earlier post about a carsales man name "jim" that someone talke to about 2 diffrent cars but never bought anything from him. it seems amazing to me that he would still be in the business with what seems to be no ablity to close the sale.

248

rockafellerskank
Dude
ID: 27652109
Wed, Dec 19, 2007, 16:38

Can anyone (car guys) expand on my Q's in #229. I'm just curious, especially about #2. I think I have my answer to #1.

249

walk
Dude
ID: 32928238
Wed, Dec 19, 2007, 16:42

Thx DealerCompliance. One day, I think me and my wife will buy a car, even though we live in a city where the cost is very prohibitive to maintain (not necessarily purchase, but keep). It's daunting to me, as I have (ahem, embarrassed to say), never bought a car from a dealer, new or used, before (previous cars were purchased hand-me down's from family). Anyway, I do get the feeling that these web-sites can get one started, and potentially even remove the haggling/anxiety factor associated with buying a car. However, sarge, says these sites add no value, and completely strip away your profit margins. Everyone deserves to make a fair and honest buck, so all I'd want, if I ever were to buy a car is a fair and expedient process and result, with me getting a reasonably good deal, and not getting anything I really did not want (unnecessary extras). Do these web-sites compete with you guys or work with you guys? They have buttons for folks to get "authorized dealer quotes," so me thinks some dealers are in partnership with such web-sites. What will the auto industry be like in 10-20 years? It seems like with these web-sites, there could be a change in how things are done. I really am naive in this area.

250

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 16:43

247/boikin: % of customers that don't haggle? Don't have an idea.

That was my post about the saleperson, Jim. Jim works for a luxury dealership, which operate a little different than 'normal' dealerships. I know that Jim sells his share of cars but would he sell more by being a little more aggressive? Yes.

Does this mean he's a 'weak closer'? I have no idea because he didn't ask for the sale. Would that approach keep him in the business in a Ford or Honda store, probably not.

251

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 16:46

249/walk: these websites generate leads for the dealerships but they are not in 'partnership' with them. When you click that 'get dealer quote' button, you input your contact information and they (carsdirect, etc.) send that lead to the local dealership that is subscribing to the leads. The dealership pays them to get your information. That's how the sites make money. They offer the research service to consumers hoping to generate leads to sell to dealers.

Hope that helps.

252

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 16:49

follow-up to 249/walk: we're all naive to that in which we do not experience on a daily basis.

You think if I was in NYC I could get around without looking at the subway map? No way!

The only stupid question is the one that goes unasked.

253

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 16:49

Sarge, the issue is that the general public doesn't trust car dealers. Whether justified or not, that is why these laws are being passed. When you fight these laws that are intended to protect the general public, you just play into the "untrustworthy car salesman" stereotype. You'd be much better off working to eliminate that stereotype than in fighting the new laws. How you do that, I have no idea.

254

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 16:53

In Post 216 I asked you a straightforward question about your professional transience. Very relevant since the "incentive" we're supposed to pay you extra for requires your actually *being* at the same job the next time I need something from the dealership. If I'm buying a new car, I sure don't expect to come back asking for favors within a year of my purchase. After that, you've moved on to the next job to inevitably bitch about. Either way, your point about paying for the upgraded treatment "next time" is completely hollow.

Wanted to come back to this, because it is a valid point and does need to be addressed. ...

Yes, when I sold cars, I sold them at a premium. If the consumer wouldnt pay, and I couldnt close them at 'my' price, I let them walk. Those who did pay, got service beyond what they had ever expected. (Their words, multiple times over.) When I left those dealerships, I gave my entire client list to a selected salesman. One who I had full faith in, who would treat those people correctly. I then sat with that salesman, and together we called each and every one of my customers. I introduced them, advised my client that I was leaving but that so-and-so would be more than happy to continue to look after their needs. I then suggested to the customer, that they should ask for so-and-so when they called in, came in or sent someone in. That way, they would continue to see the same level of service after the sale, as they had grown accustomed to.

Admittedly, this required some work on the part of whomever I selected to receive that list. And no, thay hadny been paid on it yet. But they were laying the ground work, to benefit from future sales, and future referrals, from and on the part of, customers who were not expecting top pay less than a fair price to get their new car. IOW, it was an investment that salesman was willing to make.

re your 2nd question rfs....speaking for myself...yes. I have in the past, refused to engage a customer I knew to be one of those requiring 9 hours of my time, to garner me a $50 commission.

My Grandfather was just such a man. I loved him dearly, dont get me wrong. But as a car buyer, he was just awful. He'd go to the local Olds-Buick dealership every other January and trade cars for a new one. He'd be there when they opened in the morning and was generally the last deal of the day to get done. NEVER, paid any profit for his new car. ALWAYS, felt like he paid $50 too much. ALWAYS, came home exhausted, POd and angry....in a new car. Why? It didnt take too long for all the experienced salesman to recognize him when he came in, and they'd all leave. Grandad, always got the "new guy", who just didnt know any better. The Sales Manager, KNEW he was going to buy a car, KNEW he wasnt going to pay much for it, and KNEW he could take all day long w/o losing the sale. Well, put yourself in the Sales Managers shoes. Grandad represented hellatious training material for a new salesman. As a Manager, you'd get to watch your guy handle (or try to) 43 different kinds of rude, 28 different kinds of obnoxious and see if the kid had what it takes to stick oout the deal. You'd get to send him in to practive any of 50 different closes, observe how tenacious he was, how knowledgeable and just how well he commanded the English language. Why WOULDNT you take all of that customers day, when you know you arent going to get much of his money?

So yes...experienced car salesman, who have demonstrated an ability to turn some fair volume AND hold someprofit in doing so, will get away with leaving that 10%'er to their own machinations. I have in the past told my boss...No. I'm not waiting on him or her...and No, I never got let go because of it. I was good at what I did then, and I am at what I do now, and my boss trusts me to make that call.

255

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 16:59

"One challenges me to show him statutes. Of what? 73 different trial decisions whwich is what led to the current policies?"

I'll settle for two or three to start. Heck, I'll take one that you consider particularly illustrative.

In post 201, I asked why you couldn't offer a single price for a vehicle. You replied that it was federal law, that you have to have the same policy for each customer lest you be accused of discrimination. I replied (post 204) that you could easily comply with that requirement in a way that was less obfusatory. Your reply in 206 was very illustrative. It was not "No, the law doesn't allow us to do that". It was, if I may twist your words just slightly "well, then the customer may go somewhere where they can pay less for the product". In other words, the law does NOT require you to do it that way. Dealers choose that specific method to comply with the law because it provides them maximum advantage--more room to squeeze out a few extra bucks, decide to "throw in" some extra perk that everyone has to have. Is this legal? Sure it is. Is it the only legal way? I don't believe it is, and if you can prove otherwise, I'd be very interested to see it.

The problem with the arguments is that I can think of NO other industry, where the sellers believe they "must" be less than open about the process. My suspicion is that, in many cases, the dealers have done what they had to to comply with the laws, without doing anything to even attempt to change the attitudes which got them sued in the first place.

You admit that there were a lot of lawsuits from 20 to 40 years ago, such that lawmakers felt that consumers needed protection. It's hard to tell for sure, but I think you would agree that the practices of 20-40 years ago probably warranted some level of protection, and that the attitudes of a generation were probably shaped by those actions. It's going to definitely take some time to change.

Ultimately, to most consumers, a car is, like anything else, a tangible good to be purchased. A really expensive tangible good, but a tangible good nonetheless. We believe that, like basically every other tangible good, it ought to have a fixed price, at least for the things we are required to purchase (e.g. assembly for a bike), or at least for every customer that wants to buy it at a given time (subject to normal laws of supply and demand).

We understand that additional services, not required for the purchase, will cost additional money. At the same time, we believe that services that don't benefit me specifically, or thinmgs that you have to do for every car (e.g. advertising), should be paid for by the dealer.

Our concern is not with your profit, or with how much the salesman makes--though we certainly understand that the business needs to make a reasonable profit, and sales people need to make a fair wage. Our concern is with the quality of the product obtained, the perception of service, AND the cost. Not just the cost.

Part of the problem is that consumers have been trained to fight for every nickel, and that dealers believe that they too have to fight for every nickel. That's not a desirable situation, and both dealers and consumers suffer from it.

The point was raised above that it isn't worth a typical car salesmen's time to spend 4 hours for a $50 commission. As I pointed out, that's a $24,000 annual salary. Certainly not great, but one can live on that.

Youv'e given the numbers above, but I want to get them from you again.

How many cars does the average dealership sell in a month?

How many cars does the average sales person sell in a month?

256

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 17:02

253/balrog: You are entirely correct in this post. When the dealerships start complaining about certain laws, the underlying reason is they are being picked on versus other retail merchants that operate in a similar fashion. Now, before we get into the 'but they ask for it by the way they act' situation, the retail dealerships have been targeted by state AGs and plaintiff attorneys for doing things that other merchants are also doing without oversight or lawsuits.

The complaints are mainly 'enough is enough' and the unfair legislation that specifically target car dealers but leave other retailers (furniture, electronics, etc.) alone. It's not necessarily against the consumer, it's fighting for their rights and not wanting to be sub-segmented within the retail industry.

257

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 17:03

re 253....The law passed, I have no problems with at all. Most everything in it, we already do. The legislation as originally written however, would have SLAUGHTERED the industry in Minnesota. THAT my friend, would have cost the consumers dearly.

The major reason for it being sdo "easy" to beat up a dealer over price, is the fact that another Ford store is only 15 miles away. Both have the exact same car, so its all a matter of price. The legislation as originally written, would have placed such huge extra complaince costs on a dealer, and negated the very ability to even TALK about tardes, that the end result would have been a select few "mega stores" with 30 acres of cars all under one banner. The next nearest of which, would be 4 hours away. Guess what happens then, to the price of that car? When you dont have a 15 minute trip to a competitor, but an all day round trip drive, how flexible do oyu think the price will be? No sir...as originally written, a large part of the existing dealership network would have foldd, and the end result would have meant MUCH higher prices for MN car buyers. (It also, would have put a HUGE number of Minnesotans out of work.)

258

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 17:08

Isn't it nice that chode can point out any frustrated, derogatory remarks we made, but fails to copy/paste the ones where we say that you are intelligent..... just misunderstand the process and then we defended you for that.....

Or doesn't bother to mention the "COMPLIANCE" thread, where every member of that forum talks about compliance and teaches the newbies how to BE compliant and what every member there does on a daily basis to make certain we ARE compliant.

Is there derogatory stuff about consumers there? Yup. There's even a thread devoted to stupid customers. Go read it, you may find yourselves there.....or, you may just understand WHY we found this mental giant frustrating to deal with.

It's a place we go to blow off steam. And FTR.....I'm not JR Wilson. Feel free to try again.

259

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 17:08

Okey dokey then. You guys want to keep this going.

Any facts regarding the effect of the BOR in CA on consumer prices?

260

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 17:10

Not yet. Only just took affect Jul 1.

261

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 17:10

"re 244....Thats because you dont go into your local grocer, and argue over the price of your groceries. You go in, they ring it up and you pay for it. Do that at the car lot too, and you;ll have the most pleasant experience on a car lot that you have EVER had. "

The reason consumers do that to you, and don't do it to the grocer, is because the consumer has been trained from years of experience that when they try to buy the car for the "sticker" price, there will be a surprise. They know when they go to the grocer, when they want to buy an orange, they pay for the orange, they pay the state and local sales taxes, and they walk out.

262

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 17:11

255/DWetzel: That is a great post!

How many cars/dealership per month? NADA data (these are annual numbers):
There were 21,200 franchise dealers as of end of 2006. 16% of them sold 0-149 cars annually. 26% sold 150-399. 28% sold 400-749. 30% sold over 750.

How many per salesperson? Depends on the dealership and the number of people. As with any sales profession, you will have the top % that will sell the majority of the cars, the middle % that sell just enough to get by and the bottom % that will last a short time.

The retail salesperson turnover is extremely high compared to other professions. In some places it's over 90% annually. That's high!

263

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 17:15

So nobody on the F&I forum, or nobody you know in the industry works in CA? Or they haven't kept track of sales in the last two quarters?

264

walk
Dude
ID: 32928238
Wed, Dec 19, 2007, 17:15

Thanks, DealerCompliance. I see, and then the dealer would negotiate a price with the consumer, with the consumer's on-line configuration as a starting point.

It also seems like there's an option to "lock in a price" with a service vehicle specialist (another dealer, I guess). How does that affect your profit margins? In these cases, what's the advantages for a dealer to work with such a web-site if the prices are so low?

265

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 17:16

The point was raised above that it isn't worth a typical car salesmen's time to spend 4 hours for a $50 commission. As I pointed out, that's a $24,000 annual salary. Certainly not great, but one can live on that.

Nop, at $50 per sale, the average person would make $400/m and once every 6 months theyd get $450. You used the "clock", not the avg nr of sales, which is 98 cars/yr. 98 x 50 = starving.

The avg dealership, I dont think even exists. Market areas are so varied, that its an almost impossible question to answer. (It isnt simply the nr of cars sold divided by the nr of dealerships out there.) Some market areas (rural small towns) have dealerships that are 1 or 2 man operations and sell 6 cars/m.

266

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 17:19

re 263...I have 2 very good friends who work this industry in CA. Trust me when I say this however...You dont WANT to pay CA prices. When I sold Fords in Austin, we'd have people fly in from CA to buy from us and drive it home, cause it was cheaper than buying in CA. (Right, plane ticket to Austin, plus gas home plus motels plus meals...cost them less.)

267

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 17:20

I do agree with the car folks in here that the car industry probably ought not to be singled out for this sort of treatment. This may come as a shock. I think post 253 and the responses thereto make a lot of sense.

You say that other retailers aren't targeted for some of these things. Examples please?

Sarge, you brought up the "no talking about trades" issue again. As noted above, this is something on which we don't agree about the interpretation. Can you point to any statements (excluding those produced by car industry spokespeople and attorneys) backing up your interpretation of the law? (For what it's worth, I'll try to do the same on my end.)

IF the law were interpreted as "all official offers or counteroffers regarding the trade-in value of a vehicle must be in writing, and must be put in writing before the sales contract for the vehicle being sold from the dealer to the buyer", would you have an objection to it?

268

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 17:20

re 261..and as I said above...when we tried to initiate "haggle free pricing", the consumer wouldnt allaow it. They STILL , INSISTED on arguing the price.

269

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 17:23

264/walk: they could negotiate a price or they could take the 'TMV' from edmunds. It depends.

What the dealer gets is a consumer that has said, "yes, i'm serious about buying this car and I know the price and I'm confortable with it." This is an educated consumer and a premium lead.

What the consumer gets is full research that would take all day at multiple dealerships and probably more than the average salesperson knows about the cars, their different ratings, etc.

The sites that offer to 'lock in a price' would be honored at the dealership (as part of their agreement).

As far as the online configuration as a starting point, it depends if it's the edmunds TMV or the base invoice from carsdirect. One of the most successful dealers I know, takes his invoice and his MSRP sticker to the prospective customer and says "here's what I paid, here's what they say to sell it for. make me a reasonable offer in between the two." They sell a lot of cars there and have VERY happy customers because they cut out a lot of the negotiation. Which is the part everyone disdains.

270

leggestand
Leader
ID: 451036518
Wed, Dec 19, 2007, 17:23

I haven't jumped in for awhile, but in reply to Sarge's 268, my (honest) question is: Why is carmax successful? Or is it even successful?

271

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 17:24

RE: 266
You're avoiding the question.

Oh! I found some articles from the last month addressing the effects of the CA law. Mea Culpa.

KSBY

ABC

272

walk
Dude
ID: 32928238
Wed, Dec 19, 2007, 17:24

So interesting, sarge, #268. It suggests to me that the culture of auto negotiation is so engrained that on the consumer side there's no firm belief that whatever price the dealer sets for no-haggling could possibly be the "best price the buyer could get." At some point, there is a "good price" that would make the dealer a decent profit and make it so the buyer gets a fair deal (maybe not the best possible deal) without wasting hours/days of negotiation and shopping around. However, the years, decades, of negotiating associated with cars clearly makes this change a very difficult transition.

273

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 17:30

Sorry...customers. Back when I can.

274

walk
Dude
ID: 32928238
Wed, Dec 19, 2007, 17:31

Thanks again, DealerCompliance. That's the way I'd go, with the web-site TMV Edmond's price and associated dealership, or a recommended dealership that operated in a way done by one of your colleagues that you described (that also had a good service reputation...kinda duh).

Ultimately, there's a lot of baggage in this purchase and negotiation from years of built-up mistrust (as has been indicated in this thread...mistrust of the buyer, mistrust of the dealer) which has seemingly resulted in an assumed negotiation. A lot of buyers just assume "something is up" or "I must possibly be able to get a lower price," or even a macho mentality of "look at the low price I got!" And then on the other hand is what the dealers want/need to make a good buck, and to be honest, I don't know what that is, but the perceived reputation is not good (whether valid or not).

Overall, stating the obvious again, a sorta fcuked up situation from the git-go that may take the same amount of time to un-do the years it took to make.

275

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 17:35

267/DWetzel: examples.

For instance. Auto dealers cannot charge a cash customer different than a credit customer. Apply that to Best Buy and their 12 mos. no payment, no interest. This credit card is underwritten by an outside bank (Household). Household charges interest and Best Buy 'buys down' that rate to create the incentive for the consumer. This results in a lower profit for Best Buy on that sale.

Say you told Best Buy you wanted the same price discount applied to a cash transaction as if they were going to 'buy down the rate'. They would say 'sorry', can't do that. They have 2 prices for cash and credit customers.

In the dealership world, having 2 prices is illegal. In Best Buy it's legal.

276

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 17:41

274/walk: you hit the nail on the head! it will take years to fix it because it is so broken.

Now, what is a fair profit? That number is so suggestive there is no range of answers. Example, when I first started selling cars in 1989. Consumer reports said an acceptable offer was between 8-12% above invoice. However, I just bought my wife a new car, at sticker because it's the hottest car on the market. The MSRP was 1,600 above invoice. This is a 43K car with only 4% markup. That's how much it's changed.

And you're right about the attitudes. The salesperson says "I'm making a profit off this guy" and the customer says "I'm going to get your biggest discount." If a relationship starts like that, where do you think it goes?

277

DWetzel from work
ID: 3316412
Wed, Dec 19, 2007, 17:54

Here is the problem that I run into in the math, guys. Please correct me where I'm silly about this. I'm using fairly round numbers so the average dimwit reading this can do the math on their fingers and toes.

The average car dealer (per post 262) sells approximately 500 cars per year. (58% sell at least 400, 30% sell more than 750...)

The average car sales person (per post 265) sells eight cars per month, or about 100 cars per year. Some sell more, some sell less, but the average is 100, or about two per week. This means that the average car dealer employs five full-time sales people. (500/100=5, says my calculator.)

Now, assume for the moment that this average car salesman works a 40 hour week. (I know, I know, bear with me.) This is, roughly, 2000 hours per year.

Let's assume a reasonably nice salary of $30,000 per year. That's not enough to get rich off of, but again, we're talking about an average car salesman here. The best ones will make more. The worst ones will make less. You can certainly supoprt a family on $30k per year, especially in a two-income household.

That's a $300 average commission per car. 100 cars at $300 per car. It's also $15 per hour based on a 40 hour work week. That seems fair to me.

I'm headed home from work shortly, but I'll try to come back to 275 when I get home. I may not be understanding something right.

278

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 18:09

A 40 hr week? We have that in my Wed evening in many cases and still have Thurs/Fri and Sat to go. (and Sunday in some states.)

279

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 18:13

I find it very interesting that a few of you have made an attempt at understanding what we're trying to say, and I thank you for that. Some folks I'll never be able to reach, and they are entitled to their opinions. For those of you that are trying to understand, truly making intelligent comments and asking great questions......Very cool. We will do our best to answer them in a way that makes sense to you. I think some of us agree that this is a problem created by BOTH sides of the fence. Which means, it will take BOTH sides of the fence to ever resolve it.

So...perhaps we can start, if not over, then fresh without the personal jabs? And FTR, the only finger I'm going to point here by that last remark, is at myself.

To answer the CarMax question.... the only honest answer I can give you to that one is....I don't know. I'm in power sports, so CarMax doesn't affect me. Dealer Compliance can answer that one for you probably.

My apologies if I've missed some stuff, I got busy here. Questions I can answer, that I've missed, I'll be happy to try....

Fair enough?

280

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 18:17

Apparently none of the dealer-guys can come up with any evidence of adverse effects from the CA law on their business even though it's been in effect for six months.

Apparently a number of consumer groups can come up with evidence of adverse effects on consumers from the CA law.

But what about all those lawsuits that these laws will inflict upon the dealers? I found an article addressing this:
linky

What were we thinking? We should be ashamed of ourselves.

281

Pancho Villa
ID: 47161721
Wed, Dec 19, 2007, 18:25

You can certainly support a family on $30k per year, especially in a two-income household.

Well, I'm not in a two-income household, I'm a single Dad with 2 kids. 30 grand, after taxes relates to roughly 2600 a month.

Sample monthly budget.

Mortgage or rent - 1,000
Utilities - 400
Car Payment - 250
Car Insurance - 50
Gas for car - 200
Clothing, shoes - 50
Groceries - 700
School lunch - 60
_____
2710
This doesn't take into consideration any health insurance costs or expenses, any entertainment costs, any household costs like repairs or carpet cleaning, any car repairs or maintenance, school activities,etc, all which puts you deeper in the red.

These numbers are conservative as well, for the most part. No wonder Americans can't save a dime.

282

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 18:29

re 255:

In post 201, I asked why you couldn't offer a single price for a vehicle. You replied that it was federal law, that you have to have the same policy for each customer lest you be accused of discrimination. I replied (post 204) that you could easily comply with that requirement in a way that was less obfusatory. Your reply in 206 was very illustrative. It was not "No, the law doesn't allow us to do that". It was, if I may twist your words just slightly "well, then the customer may go somewhere where they can pay less for the product".

No, my 206 said no such thing. At least, not by design. What I meant was, for a dealership to unilaterally make that change, puts them a severe and innacurate competitive disadvantage. Now, for multiple dealerships to simultaneously make the SAME change, would stem from one of 2 catalysts that I can think of:

1) Court decisions, resulting in a change in procedure in order to comply with the newest edict

or

2) Dealers getting together and making an agreement.

The second scenario, would result in Federal suits and fines, under charges/allegations of collusion and/or anti-trust violations. EVEN, if the change were one which consumers wanted and were benefitted by. We are prohibited under Federal Law, from such an event.

To use the real life ex I referred to earlier, our sale price was MSRP (8699) plus frt and prep (581) plus doc fee (50) plus Title (28) plus Lic (43.80) plus tax (600.66). Total = $10,002.46. The other store quoted a sale price of 8199. But their OTD was almost $400 higher than ours! Fortunately, the daughter thought to ask for OTD when she called. Had the Mom called, and gotten sale price,...boom! Now, if we alone moved to include frt and prep in the sale price...do you see where we suddenly stand to lose a LOT of business, vs the dealer who does NOT include frt and prep in THEIR sale price? They way we are doing it, is in fact advantageous to the consumer, vs our unilaterally putting ourselves into a deep, dark hole. (Resulting in the consumer paying MORE, at the other store in Austin.)

More as time allows.

283

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 18:29

284

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 18:44

Re 280

1st, I'm not a car dealer.
2nd, I don't live in CA
3rd, If that is indeed what that contract states, I wouldn't sign it either. I would like to have one of those in front of me before I pass judgment or make any other comment on that.
4th, MY contracts do not have that clause in them.

Not much more I can add to that.

285

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 19:08

RE 280...Lets see...the legislation has been in place for less than 6 months. You want me to take anecdotal stories, from 2 stores, disregard any potential localized causes of changes (like massive fires for ex) spread that across the entire state, and attribute those changes solely to the new legislation? Sorry...I'm not willing to do that.

286

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 19:12

RE 285:
So basically, you have no factual basis for your arguments for this entire thread,just your hunch, right?

287

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 19:25

A big industry, with a new, supposedly disastrous law in place, in the most populous and most over-regulated state in the Unites States of America, and nobody in that industry in that state is complaining. If you have something, show it to us.

288

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 19:27

*sigh*

289

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 19:30

Sigh what?

290

Tree
ID: 5211231918
Wed, Dec 19, 2007, 19:34

this sure seems like a business that does not take the whole "customer is always right" thing to heart, but rather, holds them in contempt.

i know if my customers (wal-mart, best buy, etc etc), want something, we bend over backwards to do it. even if we're only making pennies, we make it happen. heck, in some cases, you're taking a risk at losing money to satisfy the customer.

but all i keep hearing here is "you don't understand" and "the laws are against us" and "the customers don't want that, we know."

you can keep dismissing me and cursing at me, but really, that is completely what many of you are saying in this thread.

291

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 19:35

That was in response to 285. You accusing Sarge of having no factual basis for his arguments in this entire thread.

From what I've read, he has supplied plenty of facts, that you have chosen to ignore. As I have, as Dealer Compliance has.

Anything you don't like, you've ignored. Several of the others are at least trying, while you continue to sling mud. Why is that?

292

bibA
ID: 3811101020
Wed, Dec 19, 2007, 19:35

I live in Calif, and can give you my experience, for what it's worth. I decided to buy a new car a couple months ago, and knew exactly what extras and accessories I wanted included. I researched the model on the internet via several sites that would give price quotes, got quotes over the phone from "internet salesmen" at the dealerships, and got quotes from four dealerships personally.

In EVERY instance, the price quoted for the model I wanted was exactly the same, down to the dollar.

I ultimately decided to get the car from the nearest dealership to my home, for obvious reasons.

293

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 19:52

RE: 291
OK, first of all, just because you say something on a fantasy sports forum, doesn't make it a fact. I posted links to several articles from actual news organizations that say the law in CA is bad for consumers, good for dealers. None of you dealer people have done anything similar in your own defense.

I'm just asking for you to show me something from California where the dealers who have been dealing with a much more restrictive law than the one going into effect in Minnesota are upset. How is that ignoring you?

294

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 19:52

Good night all, I am going home. I wish you all a pleasant evening.

295

sarge33rd
ID: 99331714
Wed, Dec 19, 2007, 19:55

286...Balrog? Are you dleiberately being obtuse? The leghislation I initially complained about, was the way it was written. What was passed, bears virtually no resemblance to what was initially proposed. Further, ti compare/imply that it matches dot-for-dot CAs law, and that after 5 months we should be able to draw definitive conclusions, and that what does/doesnt happen in CA will be mirrored precisely in MN...is false, disingenuous and purelu argumentative.

296

MCDealer
ID: 4011291810
Wed, Dec 19, 2007, 19:55

re 293.....We must have been posting at the same time. I'll look tomorrow as time permits for the links you're asking for. Fair enough?

297

Balrog
Dude
ID: 02856618
Wed, Dec 19, 2007, 20:05

RE: 296

Cool.

I'm not trying to be obtuse, sarge. As walk said, this is a genuinely interesting subject. I'm an engineer and I just need actual facts, that's all. For me as a consumer and for you as a dealer, these laws are important. The actual impact of these sorts of laws will be demonstrated in CA. What you or I say about them is irrelevant. I'm just trying to find out what happened in CA, OK?

298

MCDealer
ID: 76442923
Wed, Dec 19, 2007, 20:42

Anybody still on? Anybody willing to listen and not throw rocks at me that is? I have some time, and I'm not distracted at work..... Seems like today, every time I came back to chime in, the subject had changed, and while I was trying to catch up, it changed again, then a customer..... you get the point.

I can't speak for the automotive community, but I'll do by best, and with less attitude. I was not having a very good day yesterday, and I may have taken it out on you guys. My apologies.

So, can we maybe do a Q&A without jumping from one fight to another? For instance, Rock said something earlier that I would have responded differently to than Sarge did. Then the conversation changed......yada, yada, yada.

OK?

299

DWetzel
ID: 45301312
Wed, Dec 19, 2007, 21:00

Re: 283...

Let's get this out of the way first: I do agree that everyone banding together to agree to sell cars in a certain way would raise some serious antitrust issues. There. Got that taken care of.

Now, let's move on to the real-world example, and I'll use the figures you use. Look at it from the consumer's point of view, and pretend that the mom called.

Let's assume she calls all three car dealers in the area: Sarge's Sales, DWetzel's Dealers, and The Other Guys before traveling to either dealership.

She calls Sarge's, asks for the sale price, and you tell her $8,699. (I don't know what the legal requirement to say "plus tax/title/license/dealer prep/etc." would be over the phone, but I assume you comply with that.) She calls Other Guys, they tell her $8,199. She calls my dealership and I tell her it's $9,200, everything included except state fees. So, she goes to Other Guys, because they're "cheapest".

Now, Mom arrives at Other Guys, ready to write that check. She understands that she has to pay sales taxes on it, has to pay the title fees that the state charges, but otherwise, she's there to but a particular car, for a price she was quoted. Upon arriving at Other Guys, she gets informed she gets to buy the car for $10,400 instead of $8199. What's this $2300, you ask? Well, it's state sales tax ($600) plus license fees ($43) plus title fees ($28), plus $1629 dollars for freight ("but I don't need the car shipped, I want to give you money and drive it home"), document fees (my local library charges 15 cents a copy, so I assume you are using at least 330 pages of documents) and dealer prep ("what's dealer prep, you ask? I could tell you, but I'd have to kill you").

Now, Mom's a bit confused, because that's an extra $1629 that she wasn't planning on spending. That's a 20% markup over the "sale" price of the vehicle.

So, next on her list was Sarge's Auto Sales. They would sell her that car for $8,699. Arriving at Sarge's, she goes through the same third degree from your sales team that she just had to endure at Other Guys. After getting through that gauntlet, she comes to find out that at least the cost to ship the car to your dealership 5 miles down the road from Other Guys, and wash it off, is apparently $1,048 cheaper on this side of town. My goodness, those car carrier guys must be making MILLIONS!

From your sales pitch plus the Other Guys, and using PhD-level math, she can probably deduce that the cost of the title, license, and taxes at my dealership are about $672 or so. Which means, using that same supercomputer, the total cost at my dealership to her will be $9,892 (give or take a few bucks) if I'm honest about the "out the door" price. Which, as it happens, I am. And MY commercials with the trained monkeys explain it as such.

Is she going to drive across town to save that $110? Probably. Maybe, at least.

Now, let's say that my price was actually $9,995 plus tax/title/license. I'm pretty sure said customer can do the math and see that, in fact, it's cheapest at Sarge's.

The disadvantage of this, of course, from my perspective, is that Sarge's and the Other Guys might find a way to lower those mysterious charges to undercut me by $100 and beat a sale out of someone. The advatange, if I run my business honestly, price my product appropriately, stick to my guns (no, ma'am, that really IS the price), is that if my price ends up being the same as Sarge's and the Other Guys, more customers are going to come my way. Why? Because it's going to save them no money, but about two hours of time and about $10 in Advil costs. And they'll rave to their friends about "oh my god, I walked in there and actually had a good experience" the next time the "how did you get screwed by a car salesman?" talk (justified or not) comes up around the water cooler.

And yes, I know that you have said "it won't work". Except that in post 136 you said it does work, sometimes. So, what are they doing in those cases where it DOES work? I'll make a friendly guess that it involves setting that "no-haggle" price at an attractive level.

300

DWetzel
ID: 45301312
Wed, Dec 19, 2007, 21:02

MC, I'm around.

301

DWetzel
ID: 45301312
Wed, Dec 19, 2007, 21:05

And I'll start with a simple question: What, exactly, does "dealer prep" entail? Whilst typing up the omnibus post #299, I realized, I couldn't even explain it without possibly making myself look like a fool.

302

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 21:22

275 277 /DWetzel's numbers:
I'll try and add some things using the example you started with but don't want to get too far off base and than can be easy when dealing with statistical numbers (you can make statistics look any way you want).

500 cars per year, 5 sales people selling avg. 8 cars per month. $300 avg. commission, $30K per year.

First, for a dealership selling 100/mo, you'll have around 8-10 salespeople and the sales numbers are not equal for the salespeople. Of the 100 cars, you'll have 2 guys selling 20-30 each and the other 6 selling the rest. So you have 2 guys at 20 each, 2 at 15, 1 at 10, 2 at 6 and 2 at 4/mo. These are ranges but, just like all sales, you have a drop off from your top producers.

Salespeople make 25-30% commission. Using your $300 avg. commission, that's $1200 profit on the car. Between new (lower margin) and used (higher margin), this is a fair enough number to go by.

So the guys are making $6k, $4500, $3000, $1800 and $1200. The avg. dealership is open Mon.-Sat. 9-9, I'm not sure of how many are now open on Sun. but it's becoming more frequent. Salespeople will either have 1 day off (dealer closed on Sun) or 1 day off and a 1/2 day off. Most of the time, they don't take all this time off because either they are the top producers and have customers coming in or they need to be at the store to try and make a sale but I'm going to give them the full time off.

So, they work 9-9 (12 hrs.) 5 days a week. That's 60 hrs (scheduled time). 3120 hrs. annually.

So the hourly breakdown is this:
At 6k/mo: $23/hr
4500/mo: $17/hr
3k: $11.5/hr
1800: $7/hr
1200: $4.6/hr

Now, of course the lower guys are going to leave. They can't afford to stay. This is also using the low numbers of 8 (not 10) salespeople and them actually staying out of the store on their day off. The realistic figure is 70+ hrs./week which adds another 500 hours to the math.

303

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 21:27

DW, I was typing 302 when all the other posts happened. Guess everyone jumped back on at the same time. I'd like to address 299 but want to read back through it and have a quality response.

balrag: same thing goes for the CA law question. I'll get there soon, man.

304

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 21:29

oh, and the carmax question. getting there too.

305

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 21:48

299/DW: That is a tremendous post and you are exactly correct about the differences the consumer hears/sees before they get to the dealership.

There are 2 toyota dealers here in town that are constantly fighting each other for business. Trying to one up each other, etc. One of them actually bought a billboard across the street from the other. It say's "Bring your quote and we'll beat it!" What they don't tell them is they charge $300 more in fees.

On to the dealer prep. MC will have to handle motorcycles, I'll take care of cars.

When the car arrives, it has a plastic coating on it (might have seen the white 'sheets'), the seats are wrapped in plastic, there are only 'break in' fluids in the car...things like that. The car has to go through 'clean up' and then into the mechanics for oil, pwr. steering fluid, gas, anti-freeze, etc. See, these fluids are considered toxic so they ship with a min. amt (under legal limits) so the car transport does not have to have a haz-mat certificate. Now, the factory pays the dealership for this service. It's also known as PDI (pre-delivery inspection).

Some dealers are putting this on the buyer's order as a line item cost but they have already been paid for it. Add this to the documentation fee and you have about $400-700 in 'fees' but they have sold the car for invoice (as they advertised to you), so it's the exchange of profit. They take it off the advertised price* (with T/T/L and fees) and put it back on when you decide to buy. Is this where people say "they screwed me by adding all these fees"...yes.

But if the consumer is looking at the Sun. paper and there are 2 dealerships advertising the same car and one of them is $700 over invoice (no add on fees) and the other is invoice (add on fees), which dealership will the consumer visit?

The job of advertising is to get people on the lot. Do you do that by advertising at a higher price than the competition? No. Someone mentioned going to Circuit City because their TV was listed $50 cheaper than Best Buy. This is reason we consumers have choices.

Best Buy had a $400 laptop advertised last Sun. Was I planning on going shopping Sun.? No. But MAN WHAT A DEAL! I showed up and they were sold out but I still walked around and ended up buying stuff.

Now, I am not, repeat NOT, defending the practice at all! I agree with DWetzel's Motors approach. Tell me what I'm paying up front. I'm just explaining the realities and, hopefully, answering your questions.

306

sarge33rd
ID: 76442923
Wed, Dec 19, 2007, 21:52

OK...first; this is going to be long. My apologies for that.

Now, let me begin by stating, for the record, I am in full favor of full and open, total disclosure in an automobile transaction. Whether its a cash purchase or a finance purchase, I (and most dealers) endorse total and open disclosure of all facts.

Having said that, it BEGINS with the consumer. YOU, have to be honest with us about your intentions. If you intend to trade, then tell us that. If your trade is a POS, then dont try and demand top dollar for it. If you're upside down in your trade, then dont demand that you be able to finance your new car, with no money down, at the same payment as your old car. If your credit svcks, dont try and convince us that you should get an A Tier Interest Rate. If you're a walking lawsuit looking for a place to happen, then go somewhere else. Be HONEST with us and we'll return the favor.

When I as a car salesman, told a customer we didnt have "that much room in a car", I WAS being honest with them. Seldom if ever, stopped them from calling me a liar to my face. Do that, and you can expect the level of co-operation you get on the lot, to drop dramatically. Come in with a belligerent attitude, and you WILL pay more for what you are trying to buy. When I first got into this business, my folks said "Oh good. Now we can buy a car at dealer cost." ????? What makes them think they are entitled to that? What makes ANYONE think they are entitled to that? I told them "No. Now you can pay full MSRP. Because regardless of how much time I spend with you on the lot. Regardless of what car YOU SELECT, for the next 3 years at every holiday dinner all I'm going to hear about is that POS I sold you. If I gotta hear it, I sure as hell deserve to get paid for it."

Some are asking for specific penal codes/legislation references. Sorry, I cant provide those. My knowledge comes from 9 years of doing this. 9 years of reading monthly industry publications. 9 years of attending training conferences and discussions with vendor reps and manufacturer reps. MOST every process in the dealership today....stems from a court case. A Court case which some dealer, somewhere at some point in time...lost. You'll just have to trust me on this one, same as I'd just have to trust Balrog with his engineering. (I couldnt decipher the math behind an engineers equations anyway.) Sometimes, you just have to take someone at their word.

I referenced earlier, the waiver forms customers sign when they DONT want to buy product in the finance office. Again, thank the lawsuit from Wisconsin for that. What lawsuit? I dont know specifically. It was circa 1995 or 1996. My reps and my GMAC Legal rep told me about it back in 1998 when I first got promoted into the F&I Office.

Administrative fees.

Federal courts have ruled that to charge a finance customer an administrative fee that isnt charged to a cash customer, constitutes discriminatory business practices, predatory lending AND undisclosed interest. That ruling, carries over to cash deals compared to cash deals. When customer "A" is charged a fee, then EVERY customer after customer "A" had better be charged the same fee, or that dealership is open to a discrimination lawsuit.

Now, what happens when someone files that suit? First off, it makes front page news in the local paper. Nice big bold print for the whole city to see. IF that suit is subsequently thrown out of court, it MIGHT be a paragraph on page 5 of Section C on Sunday. Right underneath the JC Penney bra sale ad. Maybe. The dealer loses, even if they win.

Secondly, this little thing called "discovery" takes place. Where the consumers lawyers dig into every deal file for the past 6 months. IF they find another such instance, suddenly it becomes a Class Action lawsuit, and now they will dig through every record for the past 2 years. Just looking for any "i"s that werent dotted just so, or a "t" that wasnt crossed just right. And again, it makes front page news if it goes to a Class Action status. Oh, that customer is the dealers brother and THATS why he wasnt charged the fee? Too bad. Thats illegal. That then, makes every customer who was charged the fee, a party to the Class Action. Said dealership is now out of business.

Are there dealers who DESERVE to be out of business? Absolutely. Are there Drs who deserve their licenses pulled? Yes. Are there plumbers who are incompetent and deserve to have their licenses pulled? Yes. Just as in any profession, there are both good and bad examples of that profession. No where and at no time, have I ever claimed otherwise.

The finance office

My area of expertise. Is there value in every product offered? Absolutely. Maybe not to you individually, but to someone there is. Many consumer groups scream loudly against Credit Life for ex. Yet that is the very product which caused the WI dealership to lose in court. There is a widow I know of in Harlan, IA, who will strenuously argue in favor of Cdt Life. It paid off her Lincoln Town car when her husband unexpectedly died. Pete Maravich's widow will tell you it has value. When he died, his assets were tied up for so long, his widow came within days of losing her home and cars. Credit life on the mortgage and/or cars would have made the 6 months after his passing, MUCH less financially stressful for her. An estate planning attorney in Ames, IA will argue that it has value. Because the creditor is the beneficiary, it cannot be contested by heirs and it cannot be tied up in probate. It simply eliminates a debt thus making life much easier on a surviving spouse.

What of Credit Disability? Trucker in Ft Dodge whose F350 was paid for by Cdt Health after he hurt his back on the job and couldnt work for almost 3 years, will probably fight you if you try and tell him its a waste of money. A meat packer in Sioux City, would do the same, since it paid off his family van while he was laid up after an accident at the packing plant.

Extended Service Contracts? I've had them on every car I've bought since 1986 or so. On some I used them to no end, on others? Not at all. I still get it every time though. Why? Because if I need it, its easier. I like easy. $30/m or so, and I dont have to be concerned about the tranny or the A/C or the computer control module.

Rust-proofing, paint sealant etc etc etc. Yes, yes and yes. Depending on where you live of course. Iowa puts 10 tons of salt on every mile of hard surface road every winter. Yes, I rust proofed my cars in Iowa. Texas? Wouldnt know what to do with snow. I dont rust proof here.

Markup on the loan rate. Absolutely! I negotiated the loan, with a buy rate (what my dealer has to pay for the loan) below what you can get walking into that same bank off the street. When I add 1% to the rate, it gives you the SAME rate you'd get if you walked in off the street, but you didnt HAVE to go anywhere. You didnt have to fight downtown traffic, and spend time at the banka s well as at the dealership. How many of you have bought a gal of milk at the convenience store even though it costs you an extra $1 vs at the grocery store? Same principle applies to in store financing. You want convenient AND easy? Then why should you be upset if you pay the same rate through the dealership that you'd pay if you went to the bank yourself? What possible difference does it make to you, that my store gets paid a little bit on writing that loan? Did we not do work? Did we not save you time? Did we not make it more convenient for you? Half the time, I negotiate a loan that same bank would have declined you on, had you walked into the bank off the street. Then whats the problem?

Trade ins

Trade offers ARE in writing, at every dealership I know of. NEVER have I seen a dealership that doesnt write the deal up on a buyers order and have both the customer AND the sales manager sign off on it, BEFORE it goes to the F&I office to be entered into the computer.

When you the consumer can see the numbers and have to sign off on them before the sales manager will, how is that not transparent? When that has to be done BEFORE I'll prep the legal docs for signature, how is that subterfuge?

30 years ago, to buy a car at a dealership, you filled out a Bill of Sale and a Title pplication. Period. That was about it unless you were financing. Now?

Buyers Order laying out the terms of the sale.

Odometer Disclosure Statement where the dealer affirms the accuracy of the odometer on the vehicle being purchased. (A second one if there is a trade-in, where you the consumer affirm the mileage on your trades odometer.)

Damage Disclosure Statement where the dealer affirms the cumulative dollar amounts of body repairs executed on the veh being purchased. (Second one from you the consumer on your trade if there is one.)

Title Application

Loan Application

Retail Installment Contract (if financed at the store) At the top of this form, the interest rate, the term, the monthly payment, the total of ALL scheduled payments, the total of ALL payments including down payment, the due date for payments and an itemization of how the bottom line was figured, are all presented.

Bill of Sale

Service Contract or waiver saying you decline it.

Credit Life or waiver saying you dont want it.

Credit Health or waiver saying you dont want it.

etc etc etc

Every thing, absolutely every aspect is in writing and has to be signed by both the consumer and the dealer. With that being the case, how can one possibly try and argue that there is no transparency to the process? Anymore transparency, and there will be less paperwork in buying a home than in buying a car.

Remember when you used to be able to do a credit app over the phone with your local dealer? Cant do that anymore. Federal Law says I have to verify your identity before I can pull your bureau and I have to have a signed credit app before I can submit it to the bank. Cant see your photo ID over the phone and you cant sign the app that way either. So its not that I dont care how busy you are, its that I have no choice but to require your physical presence in order to arrange financing. I know its not as convenient as it used to be. I'm sorry for that. But I have no option. I'm not willing to risk jail time for facilitating identity theft, because its inconvenient for you to come down to the car lot.

Coming onto the lot 5 minutes before we close, and thinking you'll get a killer deal, is bass-ackwards if anything ever was. We've been there for 12 hours already. We want to go home and have dinner too. But here you come...... Know what? You keep 6 of us here for 2 hours past close? You ARE going to pay for that. Trust me on that guys. I dont care how well you've done your homework. If you're going to be THAT utterly inconsiderate and thoughtless, then you DESERVE to pay, and pay you will. And if you're not paying? Then you're not buying either. And it wont take us long to figure that out. And when we do? Conversation over....go home cause we are.

307

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 21:59

305 has to deal with dealer prep on a 'new' car. Used cars have fixed repair costs that are added to the amount the dealership paid for the car. These are 'hard' costs.

Dealer buys/trades for a car. It goes through the mechanic. Gets an oil change ($30), inspection, fluid check, etc. ($50) Maybe new brake pads ($100), maybe new tires ($300). It then goes to the detail shop (no one buys a dirty car) ($100). If there are paint chips ($40), door dings ($40), scratches on the interior, rips/fading on the seats or dash, etc. ($65), chrome touch-up, wheel repair ($75 each). They have to make this car as new as possible and address all mechanical issues before putting it out for sale. These items cost them and they add it to the cost of the car.

Funny story: I was at a dealership when a customer brought in the second set of keys for their trade. (Her car was already on the line) She said, "Wow, if I knew my old car could look that good I wouldn't have traded."

So, even if a car has nothing wrong with it, the dealer still has $180-250 in repairs. Most cars see around $550. This is why used cars vary greatly in price. You can have 2 identical used cars and one of them be $500 cheaper.

You were asking about dealer 'prep' and I wanted to explain how this can be different on new and used cars.

308

MCDealer
ID: 76442923
Wed, Dec 19, 2007, 22:20

DW, My sincerest apologies! I lost the rock, papers, scissors fight and had to give the computer up.

Thank you Dealer Compliance, for stepping in.

Now, let me read what you said, and I'll be back. Yeah, I know I said that, but wasn't anticipating.....nevermind. doesn't matter. I'm here now, and I am sorry about the delay. Give me a few minutes to read and respond.

309

MCDealer
ID: 76442923
Wed, Dec 19, 2007, 22:43

DW, You asked about dealer prep, so I'll start with the easiest, as DC pretty much answered for me. Motorcycles come to the dealership in a crate. They are covered in a chemical that adheres to all surfaces of the bike. It's basically a rust preventative. It doesn't come off easy. The dealership has to pay someone to get it off, as well as build the bike. It does not come fully assembled like a car does. The front tire, handlebars, all handlebar controls, front brake, to name the few items that jump out at me have to be put on. If it isn't assembled correctly....lets say the front brake controls are not right....guess what that means? No front brake, which is where 85-90% of your stopping power on a bike is located. Hence, the Manufacturer putting in the dealer agreement that the bike has to be assembled and ridden by a dealership tech before it's delivered to the customer.

Also, motorcycles, like cars are not fully serviced. Almost no fluids, no acid in the battery, and so forth, just like DC said with the cars, and for the same reason. For bikes though, at least in my state, a bike CAN NOT sit on my floor serviced. It's against the fire code. So, prep is a 2 part process. Assembly, and a thorough washing so it can sit on the floor, and after it's sold, the battery is filled with acid and charged, the fluids are topped off and a 3-5 mile service ride is done by the service MGR to ensure the bike is operating properly. What that service ride does is put the liability on the dealership, so if a customer rides out into traffic and gets into an accident, the dealership can state that the bike was operating properly with an experienced rider on it and it wasn't due to mechanical malfunction that the accident occured. That's the idea anyway.

Let me go read some more, and I'll be back.....

310

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 22:44

If I can, allow me to make a request before anyone posts about sarge's 306.

This thread started about a new law that was passed in MN. It quickly became a finger pointing forum of 'well you deserve it', 'no we don't if you would...'.

The past several dozen posts (I've lost count now) have actually broken through the walls and I've seen some actual communication and understanding take place between the people within the retail auto/motorcycle trade and the consumers (remember, we are ALL consumers) here.

What sarge is talking about, for the most part, in 306 is the additional forms we all have to sign when buying a vehicle. This is an extreme burden on the dealership personnel, especially the finance manager. He/she has to make sure every single paper is complete and accurate, otherwise 1) the customer has to come back to resign and/or 2) the dealership can be open for a silly lawsuit because one 't' wasn't crossed.

Please take into consideration the time he took to explain all of this to us and for sharing his experience. Let's not take only his last paragraph and get this thread back into a 'see that's the attitude I'm talking about' circle again. We can go on like that for years and still never get anywhere.

There is some really good information in 306. Please ask questions if you would like expansion on topics he made.

311

MCDealer
ID: 76442923
Wed, Dec 19, 2007, 22:56

Let me address freight while I'm at it, then I'll go read some more.....

The manufacturer does not ship those bike to us for free. I wish they did, but they don't. Worse, as the price of gas and steel has increased, so has dealer cost.

Do I wish I didn't have to line item add those costs? Yes, I do. In fact, I'd sure like to meet the first guy that did and made it a "trend" for lack of a better word so I could kick that guy square in his ass.

If I could figure out a way to not charge freight and prep and stay in business, believe me, I would.

312

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 22:58

going back to the question about carmax and how they make money, or do they make money? I think that was the question but now I can't find the posting to reference. Sorry.

CarMax is mostly used cars. They do have many Chrysler/Jeep franchises within their 'super centers' but they are mostly used.

They have 'no haggle' pricing and the salespeople get paid a flat amount for each sale. Are they making money? I haven't researched that. They are a part of Circuit City, which is a public company so you can find the numbers in their annual report. But I can say, if they weren't making money, they wouldn't be in business. None of us (or our employers) would.

CarMax started several years ago. Is this the model of the future? With all the regulation taking place and the fact no one likes the negotiation part of the sales process...maybe. But then again, Saturn came out with the same thing and it hasn't changed the rest of GM. Will Car Max change the rest of the industry? Again...maybe.

313

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 23:06

Just had a thought on the freight issue. In some areas of the country, freight is more expensive than others. It also varies depending on the manufacturer. This is natural since it's a distance based price.

Toyota has less freight charge in the southeast because all the cars enter through Jacksonville, FL. Mazda has less freight in the NW because they come in through Vancouver, BC.

Actually, it can also vary depending on the model. For instance, BMW makes the X series SUV and the Z series sportster in Greenville, SC. The freight on those to, say the Atlanta dealer, is less than the freight charge on a 3, 5, 6 or 7 series.

The freight on the vehicles is paid to the distributor and manufacturer. There is $0 of profit for the dealership. It is a set cost they have to pay to receive the vehicles.

314

DealerCompliance
ID: 351123160
Wed, Dec 19, 2007, 23:08

balrag RE: 303 and the CA law question.

I want to answer that with a clear response but I am too brain tired to do that tonight. Can you allow me tomorrow? I'd also like to talk with a couple of my CA dealers and bring that information back via my post.

315

MCDealer
ID: 76442923
Wed, Dec 19, 2007, 23:22

OK, very last sentenance in 299....

Where does "no haggle" work? It starts and ends with honesty on both sides. True story from Tuesday night. Guy comes in with his grown son and they make a beeline for a specific ATV. This is the one they wanted, period. I greet them, and the man is FRIENDLY but firm, which is fair, and fine with me. What can you do for me on this ATV? We've been to so an so (1 1/2 hrs away) and we are buying either tonight or tomorrow. MY FIRST QUESTION, "Sir, do you live here, or so and so? Here, we were there for something else and stopped in. my response? "Sir, you are my LOCAL customer and I will do everything I can to earn your business. What will it take?" He looks at his kid, and kid gives me some totally off the wall #. I smiled a big smile at them both, and said, verbatim, as well as I can recall, "That's a pretty unrealistic number. If they gave you that # at XXX, then I'm following you guys out there tomorrow with MY trailer. I will however, get you as close to that as I can." I said it with a smile, and I walked off to get them a number. I ran some numbers, decided what I was willing to sell it for, and came back with an all inclusive # that was more than $1000 higher than what he requested. And believe me or not, I gave these guys a smokin deal. I gave him the #, he handed me his credit card. It was just that simple.

SO, what happened here? Easy. First and foremost, he was friendly. He told me what he wanted, and he was friendly about telling me. With his attitude, even though that by his demeaner and what he said I knew that I would be whoring out an ATV if I wanted it gone, he was straight up with me. I was straight up with him, and it worked out just fine. That guy got one hell of a deal on that ATV. Why? Because he was nice to me, and I wanted to earn his business.

Here's the thing. I will go out of my way to help someone. I will do what it takes to earn a customer's business and to take care of them after the sale. If you have a number from another dealer that I can't touch, I will tell you that too. What it takes, is the correct attitude from the customer right from the start. Trust me on this one. When you walk into a dealership with a chip on your shoulder and you're rude.....you loose money. The staff is much less willing to help you and much more likely to let you walk and go be someone else's problem.

I said it the other day, and I meant it. I don't want all the business. Just the good business. And that good business is not always the people I make the most money on. It's the folks that DON'T come in with a rotten, crappy attitude right from the start.

316

DWetzel
ID: 45301312
Thu, Dec 20, 2007, 00:05

First of all: thanks, all, for taking time to answer the questions in a very thorough way. Seriously.

Now, at the risk of trying to force the creation of rotoguru4.com, I'm going to try to cover this from end to end.

Dealer prep: It makes sense to me that there are various things you have to do to the car/bike/used car, which you've thorougly explained above. I guess the question becomes, and as noted in 305, this is where consumers get ticked off, if this is something you MUST do to the car, and you know how much it costs... well, I'd just be repeating myself. The itemizing of it makes it appear to the consumer (even if it isn't actually the case) that "preparing" the car becomes a profit center for the dealership. And I'm sure it DOES, in some cases.

For used cars, it's a lot different. By doing actual repairs to the vehicle (be they chipped paint, body work, etc.), you are actually adding value to the vehicle. It makes total sense to me that the value you give me for the car I trade in will be less than the value that you sell it for, because 1) yes, you are entitled to make a profit on it, and 2) you are actually providing an added value. And I think in most cases consumers don't have a problem with this. (Of course, I'm sure the consumer always thinks the right profit margin for the used car is less than what the dealer thinks--but that's a legitimate source of negotiation, I think.)

Freight: Same thing, basically. Yes, it costs money to ship the cars to you. We do understand that the Star Trek transporter beam is not available to take them to the dealership. :) But, it's a non-optional cost--it's hard to have a car dealership without cars, just as it's hard to have a grocery store without groceries, or a Best Buy without electronics. Those other businesses don't create a separate "shipping" fee for their in-stock spaghetti sauce or home computers.

And I am virtually certain that the cost to ship a car from the factory to Sarge's Ford Sales on the east side of town is essentially the same as it is to ship it to MC Ford Motors on the west side. (If I am wrong, PLEASE, correct me.) Again, does freight become a profit center for the dealer? It might, it might not, but the appearance is that it sure could be.

Trade-ins: Sarge, I'm glad that all of your agreements are in writing. I'd assume that most are. I have one quibble with what you wrote though, and it could just be a misunderstanding of what you said on my part. Rather than attack it directly, let me just ask this:

A significant perception of the car sales industry is that the car salesman (who is, ostensibly, in a position to know what his employer will accept) will make a deal with the purchaser, regarding price, trade-in value, whatever. Then it goes to the mysterious "Sales Manager", who is roughly equivalent to the Wizard of Oz as far as the customer is concerned. It's a common perception that the deal, which the salesman had agreed to, then gets changed behind the emerald curtain. ("I really want to do this deal, but the best my Sales Manager will let me do is _______".)

At this point, the customer is basically left there thinking "Wait a minute, we just spent all this time talking about X, Y, and Z, and now you are telling me you can't do that?" Whether this happens any more or not, I don't know.

I'll address the avalanche of paperwork in a bit.

317

MCDealer
ID: 76442923
Thu, Dec 20, 2007, 00:12

OK, re my last post, I'd like to try it another way as well.

Most people have a disdain for dealerships. OK, I'm not now, nor have I ever denied that some of you have earned that disdain and I do understand where you're coming from. The point I've been trying to make all along is realitivly simple though. For the most part, it ISN'T like that anymore, nor does it have to be. Are there still rotten apples out there? Yes. And trust me on this, the reputable dealers want them GONE as much as you do. Now, back to my point. Feel free to try this, you can do it anywhere.

DW, you're an Engineer, right? OK. I don't know what you engineer exactly....Planes? Trains? Automobiles? .....OK, probably not automobiles, but you get my point. So, lets say I walk into your office, and I think I know what it is that you do....I took drafting in college, that makes me an expert, right? I toss a pencil sketch onto your desk of a bridge and I demand that you build it out of XXX, and I want these exact dimensions,(even though in reality those dimensions would be structurely unsound) and I want it done by XXX date, and I want you best out the door price. And I want that price in the next 10 minutes, and I don't much care if you DO have 3 other people that were there before me.

What are you likely to say to me?

Let's try another one.

Walk into McDonald's, past anyone who's in line and tell the clerk.... "I want a Big Mac combo meal, I'll pay you 2 bucks for it and I want it before you serve these other people that were here first."

What kind of service would you expect?

Yes, those may be a little far-fetched, but that is essentially what many car/MC buyers do to salespeople every day.

If I did that to you, you'd laugh me out of your office, and could care less about the commission it cost you since you won't be building my bridge. Right? Honestly. Far-fetched as it may seem, put yourself in that situation in your mind and tell me you wouldn't toss me out of your office.

That's what we're trying to say about the way we treat some customers. It isn't that we don't want to help you exactly, it's just that I for one have worked very hard to get to where I am and I just don't have much tolerance for rude when I'M not the one that shafted you on that car you bought 15 yrs ago.

I have a mantra that I live by. I read it in a book written by Dick Francis. It's probably corny, but I like it, and it serves me well. It goes like this... "May I deal with honor. May I act with courage. May I achieve humility."

Admittedly, I struggle with that last one, but....well hell, I'm human.

Thanks for you time. I mean that. And once again, I apologize for my disappearance act earlier. It wasn't planned....As time allows tomorrow, I'll do my best to respond when I can and when I have something intelligent to contribute. For now, I'm off to bed. Good night all, I hope you have a wonderful evening.

318

DWetzel
ID: 45301312
Thu, Dec 20, 2007, 00:25

I was composing 316 while 313-315 were going up. It's hard to type a really long post WHILE checking web sites and playing bridge online. Hence the possible crossed wires (particularly re: the freight issue covered in 313). I think anyone but the most brain-dead consumer understands that it costs more to ship something across the country than it does to ship it 50 miles. On the other hand, it would also makes sense that within a fairly localized geographical area (i.e. the area that Customer X plans to shop in), that shipping cost would be equal, or essentially so... right?

319

DWetzel
ID: 45301312
Thu, Dec 20, 2007, 00:57

Oh, and before I get into the forms, a word about the "discrimination" thing again, as discussed in 306.

This is an area that I have significant experience in via real estate (in particular, via apartment rental). If you ever decide to become a licensed real estate salesperson in your state, rest assured that of the required education and continuing education, you WILL have it drummed into you in excruciating detail the ways in which you may not discriminate according to federal, state and local laws in your area. I admit to being much less familiar with laws as they apply to finance.

You state that "Federal courts have ruled that to charge a finance customer an administrative fee that isnt charged to a cash customer, constitutes discriminatory business practices, predatory lending AND undisclosed interest. That ruling, carries over to cash deals compared to cash deals. When customer "A" is charged a fee, then EVERY customer after customer "A" had better be charged the same fee, or that dealership is open to a discrimination lawsuit."

The first part of this statement I agree with. It would be unlawful, for instance, to charge a customer that is getting a loan on the car a higher price for the vehicle, just because they are getting a loan. You also can't decide to charge them double the "dealer prep" fee for the time it takes to process the loan. I am quite sure that the lender can charge a fee for their services (provided of course it's fully disclosed, complies with interest rate disclosures, etcetera etcetera, yadda yadda).

As a landlord, in the location we rent in, we cannot discriminate based on a number of factors, included among those is "source of income". (This basically means that if you have a housing voucher, or a fellowship, or some other "non-traditional" source of actual income, we have to treat it the same as if you were working a 9 to 5 job making that much a month). Now, I certainly CAN discriminate based on amount of income.

What I don't agree with is the extrapolation of that principle to the second part of your statement, as you seem to want to apply it. As I stated earlier (and you seem to have ignored), you certainly MAY change your policy regarding charging "administrative fees", as long as you treat all of your customers equally. It simply isn't accurate to say that because we've charged a document fee for 20 years, that we have to continue to charge it for all eternity.

I'm sure that at some point, the dealership you worked at changed the amount they charged for that fee. Common sense and inflation dictate that. As long as it applied to all customers equally over that time period, I will guarantee you that you are in no danger of losing a discrimination lawsuit.

(I cannot, of course, guarantee you that you won't be sued. People sue over all sorts of stupid things. But I can guarantee you that if you can, for instance document that in 1998 you charged all your customers a document fee of $25, and in March 1999 you raised that document fee to $50, or for that matter lowered it to zero, you would not LOSE that suit.)

320

DWetzel
ID: 45301312
Thu, Dec 20, 2007, 01:14

Man, I type slow.

MC, I am a real estate agent specializing in commercial properties (in other words, if you want someone to help sell your house, you do NOT want me.) My firm also manages approximately 1000 apartment units, and I have some background in that end of the business as well.

321

DWetzel
ID: 45301312
Thu, Dec 20, 2007, 01:29

Okay, I lied. I'll deal with the document issue tomorrow.

322

DealerCompliance
ID: 351123160
Thu, Dec 20, 2007, 08:13

316/DW: The reason shipping has to be itemized is due to law. The other retailers do not have to itemize shipping, advertising, etc. and this is the reason for 1) the dealers feeling they are being required to disclose more than other retailers and 2) confusion on the consumer part thinking it's all hidden/added profit.

If others had to disclose this it would also confuse the consumer. You buy an orange and instead of it being 50 cents. It's 30 cents, plus 15 cents plus 5 cents. It's still 50 cents but because the items are detailed, you would question the charges.

It reminds me when I got my first gas bill at my first apartment. The bill was $46 and everything was itemized. The actual gas I used was $16 and the charges made up the rest. Phone bills are the same way. So why don't they just combine all of these and charge one price? They can't. By law they have to disclose every charge.

323

DealerCompliance
ID: 351123160
Thu, Dec 20, 2007, 08:30

re 319 "discrimination":

I believe this is a combination of two different points that sarge started.

First. As long as every customer is charged the same fees (prep, doc, shipping), there are no problems.

Second: charging a finance customer one fee and not a cash customer. This issue originated from sarge talking about 'sub-prime' credit customers. Some banks will charge a fee to the dealer in order to write the loan. This fee cannot be disclosed, if it is, it's discriminatory.

What sarge was saying is once the price is negotiated and the dealer finds out the buyer has horrible credit (that wasn't disclosed earlier) they have to shift from a prime bank (no fee) to a sub-prime bank (fee). This fee reduces the dealers profit. Had they known earlier they need to allow for the fee when negotiating price, there would have been enough room to pay for the fee. This also creates assumption that "we already agreed on x price, now you say you have to add 10% to pay some bank? you guys are just trying to screw me." When in fact, it's really the bank screwing the customer, not the dealership.

There is discussion going on right now on whether these fees need to be disclosed to the customer and whether they need to be computed as pre-paid interest since it's a bank fee. (As you know in real estate, there are two different APRs once all the fees/points are calculated.) The issue is, 1) if it's disclosed it makes it discrimination because it's not charged to every customer, 2) if it's not disclosed it's a violation of truth in lending because it's a bank fee and needs to be treated as interest. See the confusion? There are two requirements that run in contradiction to each other.

It's not that a finance customer (or sub-prime finance) would be charged more doc fee, double prep fee or anything like that. It's the bank fee that is tacked onto the deal.

324

leggestand
ID: 521181920
Thu, Dec 20, 2007, 09:33

DC (312) - Thanks for the response to the carmax question. I have one car from carmax and one from a dealership. The plus of carmax - no haggle pricing. The minus of carmax - limited quality of customer service (My guess is if these sales persons were really good, they'd make more money at a dealer, and, hence, work at a dealer).

I really just wanted to hear your thoughts, so, don't stray off onto the carmax topic unless you have to. Thanks again.

325

sarge33rd
ID: 99331714
Thu, Dec 20, 2007, 10:04

In response DW, to your query re a policy to elimintae Administrative Fees:

1st...I've worked at various car dealerships in 2 states. (Iowa and Texas) In neither state, did ANY car dealership I know of, charge frt and prep as line items. Only a Doc Fee.

2nd...Motorcycle dealers charge these as line items, because of the difference in nature of the two businesses.

Now, what specifically are those differences?

On the window sticker to a car, is a line item add for shipping. No such line item to the MSRP for a motorcycle.

Cars come in on a transport, with gas, oil and fluids all topped off (except for gas. Theres maybe 2 gallons or so fo that in the tank.) And except for a few miscellaneaous items, cars are fully assembled. Motorcycles, as MCD pointed out) arrive in a totally different configuration. So, a prep or assembly charge needs to be applied.

Could we executer a new policy letter and waive admin fees from that point on?

Sure we could. But only if we were willing to absorb yet one more cost, without an offsetting revenue stream for it. Since we're not willing to do that, we're not going o initiate any such policy letter.

I've seen people drive 200 miles, because that dealer was $50 lower in price than we were. TWO-HUNDRED miles over $50! No, we cant w3aive those fees and then offset them through a change in our "bottom" price on a vehicle, because unless ALL dealers did it, we'd find ourselves at a severe disadvantage in the marketplace.

Earlier, you typed a scenario where "Mom" went through some phone calls and then went to the lowest qquoted price store, only to find a boatload of fees tacked on, so she left. Here's the error in that scenario...In practice? In reality? Mom doesnt leave. She buys there, because their price was lowest. The other two stores, with fewer fees and therefore a higher sale price (but lower out-the-door price)...never see the customer. Thats the reality of it.

326

DealerCompliance
ID: 351123160
Thu, Dec 20, 2007, 10:28

324/leggestand: Your comment about "lower quality customer service" is exactly what is happening in the industry.

If we read the posts between DWetzel and I about the salespeople's income, consider this. 8-9-10 years ago, these top guys (selling 25 cars a month) were making 9K a month instead of the 6K they are now. For the same effort they are being paid less because of 1) the publication of the invoice prices 2) the disclosure laws have created additional negotiating between the dealer and the customer.

Would you stay at a job that has made it harder on you and paying you 30% less for doing the same job? So, what happens to these guys? They either move up the ladder as a sale manager, leave for another dealership (luxury or high-line pre-owned) where they are still holding profit, or they leave the industry. Either way, they are replaced with less experienced people. You get what you pay for.

If I go to CarMax, or a lot of other dealers, I better have all my research complete because I'm not going to find too many experienced salespeople. However, if I go to Mercedes, BMW, etc., those guys know their stuff, the differences between their car and the competitor and truly 'advise' you about your purchase. The quality of the personnel is at these dealerships because they hold profit so they (you) can pay for the quality.

It's sort of the difference between going to Jiffy Lube or the Infiniti dealership for an oil change. Jiffy Lube is $25 but you sit in your car waiting for them to finish. The dealer is $40 but you either sit in their nice lounge, sipping Starbucks coffee, or get a loaner car (for free) and they wash your car before giving it back. You pay for the service if you want it and it has value to you.

327

sarge33rd
ID: 99331714
Thu, Dec 20, 2007, 10:41

from 316:

A significant perception of the car sales industry is that the car salesman (who is, ostensibly, in a position to know what his employer will accept) will make a deal with the purchaser, regarding price, trade-in value, whatever. Then it goes to the mysterious "Sales Manager", who is roughly equivalent to the Wizard of Oz as far as the customer is concerned. It's a common perception that the deal, which the salesman had agreed to, then gets changed behind the emerald curtain. ("I really want to do this deal, but the best my Sales Manager will let me do is _______".)

At this point, the customer is basically left there thinking "Wait a minute, we just spent all this time talking about X, Y, and Z, and now you are telling me you can't do that?" Whether this happens any more or not, I don't know.

At no dealership that I am aware of, is the Salesperson authorized to "approve" a deal. The salesperson, is there to help ensure that the customer is on the right vehicle. Thats the purpose of all their questions. So they can help guide you toward the vehicle that fulfills your needs AND your wants, vs just your wants. I cant tell you how often as a Salesman I'd be talking with a prospect as they were drooling over and playing touchy-feely with that sleek 2-door sportscar. Wanting to test drive it, asking about price, etc etc. Then I'd begin questioning them. Find out they have a wife and 3 kids at home. 2 of those kids in car seats and it was to be the family car. Sorry guy, the Mustang aint what you want. Well, it may be what you WANT, but your wife will slaughter you if yopu bring that home as a family car for 5 people. Once the salesperson gets you steered toward the right vehicle, then they become the negotioator on your behalf. I always tolds customers, and I was being utterly serious, ...at this point, I work for you. No sale, no commission. I'm out to get you as close to what you want, as I can....Then I worked to get an offer from that customer. Took that to the Sales Manager, and negotiated with him, trying to get him as close to your offer as I could. Then it was back and forth.

Now as for why it works this way? That Sales Manager is working maybe 8 deals at one time. He cant possibly sit with all 8 people and do business. The salespeople, are the go-betweens. One Sales Manager can only physically help one customer at a time. SO we have Salespeople, to ensure that virtually no customer is left unattended to, for an unreasonable length of time.

As for the salesperson knowing what the dealer will accept...they dont. Not if they have a GOOD Sales Manager. A good Manager, will sometimes (not necessarily often), accept a ludicrously lowball offer. JUST to make sure his salesman bring them EVERY offer, because they dont know what will be accepted. The only offer a salesperson has the "authority" to accept (if then even), is full price with no discounts.

328

MCDealer
ID: 4011291810
Thu, Dec 20, 2007, 11:19

Ah Ha. I knew there was one I meant to get back to. The elusive Sales Manager.

Now that Sarge has beaten me to it, I can honestly say I don't think I can answer it any better, but I'll try to add to it a little. I've been a Sales Manager, and as GM of a small store I find myself wearing that hat again more often than I want to.

I instruct my sales people to not come to me without an offer from the customer. Plain and simple. Even if it's a ridiculous offer, bring me an offer. This is a tool to gage how serious a buyer is. I know I'm getting into dangerous territory here, so I'll use an example. If the customer is looking to buy 3 months from now when taxes come in, (and I don't know that) then the # I spend 1/2 hr getting for him is basically meaningless. A lot can change in 3 months. Financing offers, rebates from the manufacturer can go up or down or go away entirely.

Does that make sense?

So, What I'm saying is, when you are ready to buy, I will do my damndest to earn your business. Just please, like I said over and over last night. I'm not the one that shafted you the last time, so be nice and give me the benefit of the doubt and I'll take care of you.

329

DWetzel from work
ID: 3316412
Thu, Dec 20, 2007, 11:37

Quickie on 327 there: You can, of course, see the giant steaming pile of conflict of interest there, right?

The sales manager is paying you. Not me. The obvious presumption is that your JOB, is to get the person that is paying you the best deal that you can get THEM. (This is something else we real estate types have drummed into OUR heads. The phrase "fiduciary duty" comes up a lot.) And I'm pretty sure the average consumer sees it the same way.

Look at it this way: if you were working for ME, wouldn't you show me the cars on the other people's lots as well?

330

DWetzel from work
ID: 3316412
Thu, Dec 20, 2007, 11:42

And MC, I understand that three months from now the deal may not be there. I understand that if I walk into Best Buy to price a computer, the price may be different three months from now. Heck, they may not even have that computer any more. I get that.

It occurs to me that a lot of the actual problems that seem to arise have to do with financing. That's something I may want to get into in greater depth.

331

sarge33rd
ID: 99331714
Thu, Dec 20, 2007, 11:47

In reality DW, when I gave a customer a "today" price? I meant precisely that. They didnt buy and came back tomorrow? THAT "today" price was ALWAYS at least $100 higher then yesterdays. Come back again the next day? Its another $100.

In my mind...a today price is only meaningful, if in fact it is for TODAY. And I held to that, and I held my Sales Managers to it as well.

re Fiduciary Duty...the salesperson has no such "duty". They have no authority to accept/decline an offer, so they thus hold no such obligations. As for showing you cars on another lot? They dont have access to them, so they can hardly do that either.

I for one, welcome your questions re financing.

332

walk
Dude
ID: 32928238
Thu, Dec 20, 2007, 11:53

Interesting, the sales manager concept. That the sales manager pays the salespersons. It does make a double sorta negotiation, between the customer and the salesperson and the salesperson and the sales manager. My initial thinking, which is naive and perhaps flat out wrong, is "why does there need to be a sales manager" Is that role still relevant? Or, why does the sales manager have to pay the salesperson? Maybe the sales manager just supervises and approves deals, but does not pay the salesperson, the owner does...?

I wish I knew more about some of the real exact specifics of how this works with some of my clients here at an investment bank. The salespersons, traders, and the deskheads (or trading managers). From what I know, the salespersons negotiate a price with a client (big company). Their goal is to get the client the most attractive price. They then go to the trader and ask the trader if he/she can make a trade at that bid or offer. However, the trader's goal is to maximize the spread (diff b/w bid and offer) to maximize the profit for the company (us). So, the trader will push for a higher price for a sell or a lower price for a buy, which is somewhat at odds to the salesperson's motives, who is trying to get the most attractive/competitive price to the client. The salesperson and trader have partially conflicting needs. They don't need deskhead approval, however, unless the amount of $ involved exceeds their limits (which is a rare-ish exception).

I only have surface level knowledge of this situation, but I am trying to provide an analogy to, big pic-wise, assess the value-add of the sales manager in the current auto dealership context (times have changed, so is the salesmanager to salesperson relationship still the right one?).

333

MCDealer
ID: 4011291810
Thu, Dec 20, 2007, 11:56

Wonderful. Financing it is. That's where I'm happiest, and at my best. I would happily give up my GM spot to be back in the box full time. Ask away.

re 329. Valid point about the conflict of interest, but please tell me you got some value out of that post? It was very well stated IMO.

334

DWetzel from work
ID: 3316412
Thu, Dec 20, 2007, 12:27

331: See, Sarge, that's where people get ticked at the car dealer and start screaming epithets regarding your heritage and your mother's choice of footwear.

If your prices change, the customer completely understands. If I could get a 7% interest rate yesterday, but the interest rates have moved and now the best I can do is 7 1/2%, well, that's unfortunate, but that's a marketplace issue.

YOUR costs today, for the vehicle that is in your lot, having been prepared already (for a "sunk" cost that you have already paid, or know exactly what it'll be), assembled in the case of motorcycles (for a sunk cost), etc. You don't even have to spend any more time today and yesterday combined than you would have if we did this all yesterday.

The ONLY thing that has changed between yesterday and today is that you're ticked that I left and came back the next day. Essentially, you're trying to charge me a $100 "I didn't buy it when the salesman wanted me to" fee.

335

DWetzel from work
ID: 3316412
Thu, Dec 20, 2007, 12:42

Quick starting question re: finance while our Christmas party gets started at work:

How many lenders does a typical car dealer work with in obtaining the best rates for their customers?

336

DealerCompliance
ID: 351123160
Thu, Dec 20, 2007, 13:09

oh, boy. we're going to be here all weekend now. :)

There are different banks that have different 'sweet spots', just like in real estate.

As with any lending, there are several factors each bank uses. Collateral (what is the car worth vs. what they want to borrow), credit, stability and income (more sepecifically 'debt to income ratio'). It works very similar to real estate lending (except there are no collateral based lenders).

Once these factors are determined, the finance manager will know 1) which bank has programs for the consumer's situation, and 2) the current buying habits of each bank's loan officer.

On average, the dealership will have 10-20 banks depending on 1) what type of vehicle they sell, 2) the types of customers they do business with, and 3) the price of the vehicles they sell. This will vary from dealer to dealer.

For instance, a BMW dealer can live with 4-5 banks. Their captive BMW Finance, BMW Lease, major bank and local bank. A Honda store will need more banks, especially if they see a lot of 'near prime' or 'sub prime' customers. They need 1) finance managers familiar with these deals and 2) banks that have programs for this type of customer.

However, the bank with the best 'rate' may not necessarily be the best bank for your situation. For instance. We took my father-in-law to the GM dealer to get him a Yukon. They had that 0% or $4000 rebate program going at the time. He had a large downpayment (insurance check from totalled vehicle) and was going to finance the rest and wanted to pay it off early (doesn't like payments). So, instead of the 0%, the finance manager suggested (and I agreed), take the $4000 rebate and finance at "this" bank at 4.9%. Since he 1) was not financing a lot and 2) was going to pay it off within the year, this situation saved him more than the 0% would have. We would have not thought about that option but it was the best option because of the total savings. Was it the best rate he qualified for? No but it was the best for his situation.

337

sarge33rd
ID: 99331714
Thu, Dec 20, 2007, 13:20

RE 334: I certainly understand your ocntention, to a point. Do you also see mine? A today price, HAS to be "today", or whats the point?

If you walk into K-Mart for ex, and look at say tents. One is mismarked at $5 when its suppoded to be $55. You dont buy it but come back tomorrow, only to find that they have corrected the price. You dont think you're going to get it for $5 do you? You would have yesterday, but not today. Or if the sale ended yesterday, you dont honestly expect K-Mart to honor the sale price, when the sale is over. Right?

I've had prices change by as much as $1500 overnight, when certain rebates/incentives ended. We'd tell the consumer the program was ending today and we'd not be able to honor the quote tomorrow. They'd choose not to believe us and then come back tomorrow wanting that same price. Sorry, no can do.

The ONLY thing that has changed between yesterday and today is that you're ticked that I left and came back the next day. Essentially, you're trying to charge me a $100 "I didn't buy it when the salesman wanted me to" fee.

As far as I'm personally concerned, when I gave a today price...thats precisely what I meant...today. The consumer has gotten used to believing they could leave, come back at their leisure and still get that special discounted price. Well, to be fair to the consumer who didnt leave but bought, I owe it to them to mean today, when I say today. IOPW, If you bought at the "today" price, how upset you would as a consumer be, if I gave someone else the today price...3 days later?

Re number of lenders...

Truth is, there is no such thing a sa "typical" dealership. I've worked in stores selling 225-250 cars/m. I've worked in stores selling 20, stores selling 60. Normally, FWIW, the more cars a store sells in a month on average, the more sources they will have available to them.

338

MCDealer
ID: 4011291810
Thu, Dec 20, 2007, 13:26

re: 335 I'll let DC handle the car side. As for the MC side.....I sure wish I had the car sides options!

1st and foremost, please understand that MC, ATV, or PWC's are playtoys. They are not easy to finance. I can go finance a 100K house easier than I can qualify for a 2000.00 dirt bike loan. Sad, but true. Why? Because it's a toy. Also because you can't hide your house in your buddy's garage so the repo guy can't find it. It's a want instead of a need. Think about it like this. Let's say you have a rotten couple of months and money gets tight. Which payments are you going to make 1st? Your house payment, your car payment, your power bill, and food. The phone bill, credit card bills, even the insurance bill, and without a doubt the bill for the playtoy are going to trickle down to the bottom of your priority list.

So, where the car guys may have 20 lenders, and can get deep sub prime bought, I have 2 major ones in house and then local credit unions and hopefully a friendly bank. And NONE of them are going to buy an auto adjusted 600 credit score on a bike.

339

sarge33rd
ID: 99331714
Thu, Dec 20, 2007, 13:34

338 illustrates precisely why Harley-Davidsons finance arm is in trouble these days. HD has a LONG history of buying "deep". That is, they showed a tendency toward approving someone to buy a Harley, that couldnt have gotten financed on a car. Why? Ego frankly. They figured if the customers finances got tight, they'd still pay for that Harley in their driveway. They've since learned otherwise.

Motorcycle repo rates are on the order of 5 times those of cars. Motorcycles totalled in accidents, run an astounding rate, and I've not been able to locate definitive information on those. HUGE numbers of motorcycle riders, have either no insurance at all, or liability only. The risk to a lender on a motorcycle loan, of that loan defaulting, are astronomical when compared to a car loans exposure. Therefore, the interest rates are approx double that of a car loan, and approval is substantially more difficult to obtain.

340

MCDealer
ID: 4011291810
Thu, Dec 20, 2007, 13:36

Another big difference between MC's and cars. The financing itself. Most car loans are installment contracts. 98% of in house MC loans are done with an incentivized revolving loan. (Credit card)

Current promo.... 8.99 for 24 months with a minimum monthly payment of as low as $49.00 a month. The monthly payment is based on your total amount financed. 0-5K = $49.00, 5-7500 = $69.00, 7500-10K = $99.00 and so on.

At the end of the 24 month promo period, your APR goes to 13.99 and you payment goes to 1% of the balance.

Now, just like ANY credit card, you can pay for this bike forever if you choose to. The whole point of this program is to take advantage of the low payment, send them as much as you can afford to send and pay it off quickly. Customers LOVE that low payment, and I do my very best to explain to them the hazzards of just sending that minimum payment in.

341

MCDealer
ID: 4011291810
Thu, Dec 20, 2007, 15:47

We really aren't ALL bad.

http://dealersedge.com/ME2/dirmod.asp?sid=&nm=&type=news&mod=News&mid=9A02E3B96F2A415ABC72CB5F516B4C10&tier=3&nid=EE9BD46E760D4685A57CEAE428C8D8C3

According to an Associated Press report, Billion Automotive is covering half the cost of the $80,000 needed to charter a plane to bring the 147th Field Artillery Unit, B Battery home from training.

The 185 soldiers will spend four days with their families over the Christmas holiday. “They have a break in their training schedule. It was just a question of how to get them home,” said Lt.Col. John Holter, who recently left command of the unit.

The 147th has spent two months training in Mississippi for an upcoming yearlong deployment to Iraq.

Car dealer Dave Billion said he heard about the fundraising campaign and knew bake sales weren’t going to cover much of the cost. “It’s a pretty expensive proposition to bring them home,” he said. “The timing around Christmas and knowing people that have family members, we just felt it was a way for our Billion Automotive family to say thanks to the troops and their families.”

Georgia Holt said fundraisers will lessen, if not totally remove, the financial burden of allowing her sons, Ty and Bret Holt, to eat oyster stew at home this Christmas. Ms. Holt said people are pitching in from across the state with penny challenges, spaghetti feeds, silent auctions, rummage sales and bake sales.

“It’s always very important on holidays like Christmas to be with family. That’s what the holidays are about,” she said.

The Guard soldiers were sent to Camp Shelby, Miss., in October to train, and expect to leave for Iraq in late December or early January. Convoy security is their mission. Lt. Col. Holter said the soldiers were fortunate to have attracted the attention of a man with the means and desire to make the trip home happen.

“To get to see your family at Christmas right before you leave, it means the world to those guys,” he said.

Kudos to Dave Billion- just another example of the big hearts of those in the auto dealer community.

Help our military in foreign lands to Phone Home this Christmas!

Many thousands of our military men and women are in foreign lands this Christmas - you may not be able to bring them home for the holidays, but you can help them reach out by telephone to their loved-ones.

Help us support the USO’s Operation Phone Home. All of the money contributed to this program will go toward putting pre-paid international phone cards in the hands of our troops in foreign lands - every dollar. Please click on the USO logo on the upper right-hand side of this page - or look for the USO logo at www.dealersedge.com.

DealersEdge readers have been generous so far, but it is only five days ‘til Christmas. Time is short, but you still can make a difference. Please be generous and please do it now.

342

rockafellerskank
Dude
ID: 27652109
Thu, Dec 20, 2007, 21:48

I bet Walmart will change the industry eventually.
or the next mega-conglomerate.

link

344

sarge33rd
ID: 76442923
Thu, Dec 20, 2007, 22:31

wal-mart tried selling cars about 10 years ago. they bombed---HUGE.

345

rockafellerskank
Dude
ID: 27652109
Thu, Dec 20, 2007, 22:32

Really? A national multi-billion dollar push? I must have missed that.

346

sarge33rd
ID: 76442923
Thu, Dec 20, 2007, 22:37

They ran a test market of it several years ago. They found that it didnt fit their "busness model". IOW, there are sufficient dealers out there thay wally couldnt "corner" the market via bulk purchases and they couldnt bully wholesalers into caving into their pricing demands. Whole experiment lasted a couple of months.

347

rockafellerskank
Dude
ID: 27652109
Thu, Dec 20, 2007, 22:47

Eh. One thing is for certain, things change. I'm sure Ma Bell never envisioned cell phones. Been thinking the past few days that car dealerships in their current state seem ripe for a revolution. That's all. I know you hate Wally_world, but i'l et there's a consumer market for cheap Chinese cars they could service if they wanted to drop a few billion.

348

DealerCompliance
ID: 351123160
Thu, Dec 20, 2007, 22:50

CarMax snuck in Chrysler's back door by buying up a bunch of chrysler/jeep/dodge dealers and consolidating them into their 'supercenters'.

They were going for the same bulk purhcase discount approach and Chysler slammed the door on the rest of their purchases out of demand from their dealers.

349

DealerCompliance
ID: 351123160
Thu, Dec 20, 2007, 22:54

347: the ma bell comment. It's kind of funny that all of it has rolled back around. The government broke up ATT because they were a monopoly. ATT was only long distance, now look at them.

Most of the baby bells are back under their roof. They have DSL, cell phone, long distance, local service and cable.

IMHO, it shows that free markets will trump government intervention.

350

sarge33rd
ID: 99331714
Fri, Dec 21, 2007, 10:48

2002 Effort by wally to enter the car market...failed

same effort, additional info

Simple truth is, the ROI on auto sales, isnt what traditional retailers are looking for. They've "been there-done that" and goto ut of it when returns failed to meet expectations. I dont see any reason to view this latest exploration any differently.

As for "cheap" cars....anyone seen a Yugo lately?

351

MCDealer
ID: 4011291810
Fri, Dec 21, 2007, 13:18

re 347.....cheap Chinese cars. Not saying it couldn't happen, but I doubt very seriously it will. For so many reasons, but 1 thing I would like to point out.....Anyone here remember Yugo's?

IMHO, cheap-o cars will go the same way the Yugo's did.

The other thing, that I deal with on almost a daily basis, especially in January..... There are hundreds of secondary manufacturers out there putting out cheap-o youth ATV's. You can find them online for $599.00 all day long. Guys, there's a reason the "big 5" major ATV manufacturers sell their youth ATV's for 1799+.

Folks come in, freak at the 1799, go buy a 599 one instead online and they're back here a couple of weeks later looking for parts and service. Except....parts are not available for them and there isn't a service tech anywhere (that I've seen or heard of) that will work on them. Those units are disposable, plain and simple. If it breaks, and it will, toss it in the dumpster and start over.

OK, I've been trying to post this for almost 2 hrs now, so I'm going to quit while I'm at a half decent stopping point. I'll be happy to expand on this as time allows if anyone has question.

352

sarge33rd
ID: 99331714
Fri, Dec 21, 2007, 14:46

36 yr old buyer puts 4k down in late July and by Christmas, his bike has been repo'd by the bank. THAT, is why its so difficult to get motorcycle/atv/jet-ski/boat/snowmobile financing.

353

sarge33rd
ID: 99331714
Fri, Dec 21, 2007, 18:38

File this under: Advantage of dealer financing...

Customer plunked $5,000 down last year on a $25,000 custom bike. Marginal credit, got the Credit Union with whom I have a 4 year history, to do the deal for him. 7 months ago the guys company sends him overseas to work. He leaves his folks with instructions for his finances. They didnt want him to get the bike (guy is 30 yrs old) so they quit making the bike payment. Fella comes home to find his bike loan 6 months in arrears and Dad has told the CU to FO 2 or 3 times. They've begun repo action. Guy calls me to see if I can help. I get my Rep in here and she gets on the horn with their collections people. I have my customer on another line. 45 minutes later, I've "brokered" an agreement whereby he has until Mon noon to make the loan current and the CU will cease repo action and report the whole thing to the bureau as an "error". Customer tells me it will be done before the sun sets today. If by noon Mon he hasnt, deals off.

We in the dealerships can sometimes work these things out, solely because of the volume of business we send to a given lender and the inherent relationship that kind of working familiarity brings. I'm inclined to believe that THIS customer, has no problem with the $300 my dealerhip got paid for negotiationg/writing that original loan. Worth that and then some to him.

354

MCDealer
ID: 76442923
Fri, Dec 21, 2007, 20:37

Merry Christmas everyone. I expect to be swamped at work tomorrow (fingers crossed) and then I'm on vacation till the first of the year. I wish all of you and yours a very happy holiday!

except for maybe.......nah! ; ) Just kiddin.......

Forum: polPage 3009Subject: Minnesota car buyers "Bill of Rights"

Forum: pol
Page 3009
Subject: Minnesota car buyers "Bill of Rights"