Car salesmen strike back!
By Bankrate.com
Car salesmen have feelings, too.
That's what the editors at Bankrate.com
found within hours of publishing our 2004
New Car Guide -- a 68-story package covering just about everything
you need to know when buying a new car.
One of those stories, called "Top
10 dealer lies" apparently struck a nerve -- a raw nerve
at that -- among car dealers and salespeople across the country.
And they let us now about it. In
no uncertain terms.
Well, our motto here at Bankrate
is "Comprehensive. Objective. Free." And because we are
dedicated to those principles, we recognize there are at least two
sides to every story. We also believe what's fair is fair and with
that in mind we present here a sampling of the letters we received:
Dear Bankrate:
While some of the issues you presented may be valid, they are
not the norm for reputable car dealerships.
Why are banks, furniture stores, jewelry stores, etc.,
allowed to have returns on investment in excess of 100 percent and
you are beating up car dealerships? Finally, let's talk about the
typical consumer transaction when people go to a car dealership
attempting to purchase a car and the tricks the consumer will play:
"We are not here to buy we are only looking."
(Okay why waste everyone's time? Stay home.)
"We have excellent credit."
(Yeah, right. That's why smoke pours out of the machine and the
alarm sounds when the credit is submitted).
"My trade-in isn't here, but
it is in perfect condition." (Yeah, except that I rammed it
into the back of a semi last week and the transmission is on the
fritz, too.)
"My trade is 4-wheel drive,
loaded with every option." (Sir, someone stole everything but
the brakes and steering wheel off your trade.)
"Give me your best price."
(Yes, that will work -- so you can go beat up the next dealership
with our price.)
"My bank says my trade is
worth more than that." (Well, go sell it to your bank -- a
client always has that option.)
"You don't want to sell me
a car." (Right, we are just open for our health.)
A reputable dealer always appreciates
the well-informed, knowledgeable client and if he happens to have
some math skills where he can figure interest rates, and knows the
price of car divided by the length of time he wishes to pay for
the car equals the payment -- Hallelujah!
-- Donna C. Williams
Dear Bankrate:
This is a business, not the Goodwill.
Where were all of you so-called do-gooders when clowns like Ken
Lay and that bastard from Tyco were raping their employees out their
life savings?
-- Anonymous
Dear Bankrate:
I enjoyed your article, but please
remember that salespeople are on a 15 to 20 percent commission.
If we sell a car at invoice, we get maybe $50 to $100, depending
on the dealership. Some dealerships give nothing if a "no profit"
deal goes out. Yes, the dealership always makes money, but that
does not mean the salesperson does. If I sell 16 to 20 cars a month
at $100 per car, I make $24,000 a year. Terrible, isn't it! Let's
be fair in our recommendations to consumers. We all deserve good
service, and that means somewhere we have to keep good people. (It
usually takes good wages.) Thank you,
-- Christian T. Kocmick
Dear Bankrate:
How about an article on 10 reasons you
shouldn't buy a car $100 over invoice? How about mentioning that
cars at dealerships are financed by the dealership, and this is
what holdback really pays for? How about an article about overhead
at a car dealership -- or about how ridiculous advertising costs
are -- the real reason you pay so much for a car? How about telling
the actual percentage of car dealers that really are crooked? Your
article made it seem we all are thieves.
How about an article about car dealerships that discount
their cars so much, that they use the service department (revenues)
to pay for the sales department? How about an article on the fact
that your average car sale has a 2 percent markup, while your average
bottle of soda has a 60 percent markup? How about the 400 cars that
have to have snow removed from them after every storm, while most
people complain about one?
When is the media going to get off our backs, and
go after the real culprits in America? Please excuse us for making
a living (barely compared to most other businesses) on quality items.
Nobody blasts Wal-Mart for a 50-percent markup and sub-par quality
items and beats them to death about it over & over & over
again each week!
How about an article about getting more at your dealership?
Mine gives lifetime oil changes & 100,000-mile warranties with
every used car.
Your article was terribly one-sided, and some things
were just wrong. I think we need more articles and laws about keeping
news and information on the Internet morally and ethically correct.
Maybe then, an honest car dealership can stay afloat and keep giving
quality services.
-- Anonymous
Dear Bankrate:
It has been said that as soon as you
get a dollar, there will be a line of people to get it from you.
Society is full of people who can't stand to see someone else be
successful. Society is just as full of people who are unethical
in their buying practices as it is of unethical salespeople. This
is not to say that all people are that way. Fortunately, there are
more "good" customers than there are "bad."
Car dealers need to be aware of the many tricks that
customers use to try to take advantage of car dealerships. The increased
access to information has given customers the impression that they
know everything. The constant barrage of misleading news stories
about car dealerships has given customers the false impression that
they are always dealing with a crook and that the customer needs
to be a crook to stay even.
Here are but a few of the many customer tricks to
look out for:
The deflated credit risk
Some customers will come in and assure you that the have impeccable
credit history. They may even bring a payment book to show that
they only have a couple of payments left on a 48-month loan. What
they don't tell you is that there are several payment coupons removed
from the book that haven't been mailed yet. What they do is try
to lock you into a low interest rate that is only available to those
customers that don't have any blemishes on their credit report.
When you discover that their credit is less than desirable, they
accuse you of all sorts of things.
The transaction trick
Many dealerships believe the customer when they say that they
have nothing to trade in. What the customer will do is claim the
purchase to be straight out, no trade to get your best cash price.
Once you have given them a great deal, they will hit you with a
trade in. Any reasonable person would know that the trade-in should
be appraised somewhere around "suggested trade value"
or "actual cash value" but the customer will act completely
offended by what he claims is an offer way too low.
Another trick used by the customer is to agree on
a price and then all of sudden threaten to walk out unless the dealer
agrees to throw in some accessories. Even though an offer has been
made and accepted, the customer thinks he has every right to start
demanding more and to be outraged when the dealer doesn't bend over.
The payment ploy
Many times a customer brings in an advertisement that specifically
states the terms of the payment advertised. After agreeing that
this payment will work for them, the customer seems shocked that
they have to come up with the advertised amount of down payment.
They will claim false advertising and make all kinds of noise even
though the terms are clearly stated. These people make a practice
of attempting to deceive everyone they deal with. Intimidation tactics
are part of this customer's every day life.
The invoice-only customer
This is the customer that has done his homework and comes in
with the invoice and will not pay a penny more. They must confuse
dealerships with some nonprofit business. These people have no
clue about the thousands upon thousands of dollars that every new
car dealership in the country is forced to spend on tools, training,
brochures, advertising, facilities, and a whole host of other expenses.
These same people will expect the dealer to have loaner cars available
when they bring their vehicle in for any service.
Why is it that a car dealership is the only place
where the customer comes in armed with the cost of the product desired
and then insists on buying at or near cost? Clothing and furniture
have a far greater percentage markup (in excess of 100 percent in
many cases) but you never hear anything about them.
The exact-same-vehicle hustle
It seems that almost every customer that comes in has been
to every other dealership within a four-state region. They all tell
you that they can buy the "exact same vehicle" at another
dealership for "thousands less." Often they are able to
convince the salesperson. By doing this, the customer now has the
salesperson trying to sell the concept to the sales manager. The
sales manager should know better and should call the customer's
bluff. If these customers end up buying the other vehicle, you will
see this customer with a vehicle that isn't equipped anything like
the vehicle that you were trying to sell them. Any customer that
is as educated as they claim, knows that there aren't "thousands
of dollars" to give away in negotiations.
This is just another ploy to beat every last dollar
of profit out of the dealership
The hold-the-check call
This customer will come in and make a deal on a car and writes
a check. Low and behold, later in the day the customer calls back
and says that he needs to transfer some funds and can you hold his
check for two days. Sure, you still have the title and the other
paperwork but the customer has the car. Once again they are literally
"in the driver's seat." If you just ignore the customer's
request and deposit his check you run the risk of alienating a customer
and having a check returned by your bank. Your option is to hold
the check as requested and have a vehicle being driven that isn't
actually paid for. Of course you can always demand that the customer
bring the vehicle back but you are at a disadvantage.
These customers know what they are doing and are
just using you.
The financially inverted
Some customers have never paid off a vehicle in their lives.
They continue to roll the payoff from one vehicle into the purchase
of the next one. When a dealership attempts to counsel them on the
long-term cost of doing this, they simply say, "If you don't
want to sell me a car, I will find someone else that does."
These customers continually have an unpaid balance on their trade-ins
because they either insist on a long term, a low down payment, or
a balloon payment at the end. The dealership is the one that will
be blamed when this customer is finally forced to face their financial
reality. This customer will never look into the mirror and recognize
the person that insisted on never seeing the final payment of a
loan.
The bait and switch
The customer will come in and complete the purchase negotiations.
They will make arrangements to pick up the car late the next afternoon.
When they come back they will park their trade-in away from the
showroom doors and out of sight. After the customer drives off with
their purchase the salesperson will go out to park the trade-in
in the designated area. Only then is it discovered that this car
is not as it was when it was appraised. Maybe it now has an old
battery or maybe it has a set of tires on it that are practically
worn out. Maybe the tonneau cover has been removed. When you call
this customer they will deny that anything has changed and that
your appraiser must not have looked at the vehicle very closely.
Typically you will have no recourse on this deal.
If you prove you are right, the customer will bad mouth you and
spread false stories about you. It may be best to let the dishonest
customer get his way and learn from your mistake.
While it is true that there are many great
customers, it is also true that there are many that will take advantage
of a dealership at every opportunity. How can a dealership protect
itself against these people? Dealers need to accept the fact that
they are targeted by con artists. Much of this has been fueled by
a news media that finds an unscrupulous dealership and then runs
major stories on them. Sure they will run a small disclaimer but
99.9 percent of the story will have a negative slant.
I have worked in car dealerships
in excess of 30 years and I strongly feel that there is a definite
reason that car salesmen are not trusted. That reason is that there
are so many customers that are dishonest with the car salesmen that
the customers think it must be happening on both sides of the desk.
If only we could believe it when we hear, "It doesn't burn
any oil" or "It always starts right up and runs great."
The competition to sell cars and
trucks has never been greater. The direction of the market is toward
the gigantic mega-dealers. Every year there are numerous small dealers
that are forced out of business because they can't compete with
the volume dealers. The small dealer is forced to buy special tools,
product literature, and many other things but is not able to make
a reasonable profit. As long as the news media convinces the buying
public that car dealerships can't be trusted, the operating profit
will be squeezed. Eventually all that will remain will be the large
dealership chains. When that happens the tables will turn and the
dealerships will be the ones in control. When that happens, maybe
there will be some that will look back at the good old days of how
we used to buy and sell cars before the campaigns against car dealerships.
-- Doug Chilson
Prostrollo Motor Sales Inc.
Huron, SD
Dear Bankrate:
Before you write an article based on one low-life auto salesman
line of crap maybe you should learn what the hell you are talking
about. Your article is (so) full of half-truths and total misconceptions
that all you are doing is confusing the car buying process even
more. Do NOT and I repeat DO NOT confuse the actions of a corrupt
few to poorly educate the public on the rest of the industry. Why
is it that the automobile industry is the only retail industry that
has all its costs open to total public availability and is it a
sin for them to make a profit to stay in business? Does anyone go
after boat dealers, electronics chains, eyeglass makers, funeral
directors or lawyers? These are industries that stick it to people
every day but never are labeled the way car dealers are. Take my
eyeglasses. The sign said $99 but when they were done the cost was
$500. How about funeral directors who take advantage of people when
they are emotionally weakest and screw them royally for thousands
more than a car dealer could ever make on the average car? How about
lawyers who sue for ridiculous and frivolous reasons and run up
legal bills on hapless souls?
I need my car dealer to stay in business for as long
as I own my car in order to service my vehicle and be there when
I need to purchase again. It's a retail establishment in a capitalist
economy that must make a profit to stay in business. Maybe you should
tackle the huge stock groups that are buying up dealerships and
running them like every other corporation in America and looking
to squeeze the whole world dry without conscience instead of the
entire car industry, which is made up of small family businesses
that employ thousands of hard-working, honest people.
-- Robert Hoffman, Oakhurst, N.J.
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