Dealing with Dealerships - NOT fun

[mchastek]

When I purchased my vehicle a little over a year ago, I HATED the experience. Dealerships play so many games, I feel that the unsuspecting consumer is at a SERIOUS disadvantage. The Internet seems to be leveling the playing field a bit, but unless you do your homework, be prepared to be taken advantage of - in my opinion.

When I go to purchase a TV, or a meal, or shoes, or anything else, the price is clearly marked, and I know exactly how much everyone else will pay for the same item. Why does a car purchase need to be any different?

I know some companies are trying the "no haggle policy" - is that working both from the consumer's perspective, and from the dealership's perspective?

Further, I don't appreciate dealerships that claim "we're losing money on this deal" when I can clearly see a brand-new beautiful showroom. Is it really necessary to play these games?

The only way I've found to get a "fair" deal is to involve a handful of dealerships in a price-contest. I had to go back and forth between severl dealerships until each one dropped out and only the lowest price was left. I don't enjoy putting a salesperson through all of that work and not purchasing a car in the end, but I felt optionless.

I'd love to hear some comments from a Dealership perspective.

-Mark

[OOTG]

I sold cars for 15 years and have taken a career back seat due to dishonest owners. As they say, "it starts from the top and works its way down". What I thrived on was a customer who realized that a "fair deal" was the goal and that the dealer wants to make money and the customer wants to feel like they got a good deal on a car. It should be a win-win for both parties. What I despised was anyone relating it to a "game". It was a career for me and not a game. The customers are the ones who, in my opinion, made it seem like one. Yes, people shop for best pricing and that is normal and expected. What most customers really need to search for is an honest, ethical person to do business with and it should be a pleasant experience no matter how much haggling has transpired. I also agree that there is no need to sell cars at different prices, but getting the world to change on this one is not in the cards. Just like it is for all dealerships to adopt a salary with merit bonuses for volume and performance so that salespeople are not competing against each other. So, if anyone has a great career idea for me, send me a note!

[mchastek]

Thanks for responding to my rather old thread.

When I purchased my vehicle, one thing I appreciated was going back and forth on the dealer's profit "over invoice". I negotiated based on this. While I cannot be 100% sure they were telling the absolute truth, I was able to at least get an idea for the invoice numbers, and add on $x,xxx as their markup. I am completely comfortable with them making a profit, and do not expect any different. However, I like at least being on a level playing field. I agree that we probably won't see fixed prices any time soon, and that's OK. More than anything, like you said, I just want an experience that makes me feel comfortable, and not like I'm being taken by the dealership.

[Rennsport Calgary]

No haggle pricing isn't something that dealers dislike.....the public wants to haggle in a way.......but we are the ones taking the blame for it.

Unfortunately, the bidding model for domestic or Asian cars works well.....there's no real need for any kind of sales/client relationship so price is the only thing that matters before service...etc.

Otherwise on high end and/or exotic stuff and collectibles a sales/client relationship actually matters and pricing is selective.

[dramonte]

Truly Mark;

Appropriate options to the haggle and hassle of a traditional auto buying process are far and few between. And, the generous amounts of information available via the internet often only leaves one with conflicting ideas about which way to be the best automotive consumer. The best automotive consumer, in my experienced opinion, is the one that know what she wants, how she wants it, and how the appropriate professional can help her get it.

[dramonte]

Also Mark;

An oversight on your part, I am sure, but the correct spelling of "severl" would be "several", I think...

[mchastek]

Truly Mark;

Appropriate options to the haggle and hassle of a traditional auto buying process are far and few between. And, the generous amounts of information available via the internet often only leaves one with conflicting ideas about which way to be the best automotive consumer. The best automotive consumer, in my experienced opinion, is the one that know what she wants, how she wants it, and how the appropriate professional can help her get it.

I agree. Since the consumer has the money, they really have a lot of power. There are plenty of dealerships with the same product, all targetting the same precious dollars. Going into a dealership knowing exactly what one wants and not accepting anything less is probably the best way to deal with this situation.

And yes, that was just a typo on my part. We really need to add a spell checker here!

[elawless]

I think vehicle locaters/shoppers are the best way to go. Rather than spend any time looking for cars, haggling with dealers, and wondering whether you were scammed, why not just hire someone to buy the vehicle for you?

[Stacker]

Car people are looked at like "crooks" by everyone no matter what you do. You can lose over 1000 on a deal get a survey saying it was a bad experience and your still the crook. Now I ask you, who is the real crook? The customer or the dealer. God forbid if we try to make a profit, we are low down liars and scammers if we make money. Remember the saying "buyers are liars". Its more true then you think. Onem ore thing. From the famous car movie Suckers "The customers job is to pay as little as possible. The salesmens job is to make as much as possible. Should you feel bad because you are better at your job the they are at theirs?"

[mchastek]

That is a very good point that you brought up. I can't speak for anyone except myself, but when I purchased my vehicle about two years ago, I was perfectly OK negotiating in terms of dealer profit. We ended up agreeing on $1,500 over invoice, which was acceptable for me. I know they're in it to make money, but when I walk into a gigantic dealership with 10 plasma TVs and tens of thousands of square feet of space, and they try telling me that they're losing their shirt on a deal, I have a hard time stomaching that.

Also keep in mind that the dealer has all of the information - the price they paid, the financing kickbacks, the amount of profit they'll make, etc. The customer only knows what they'll be paying, which is a big disadvantage. Heck, even in my case the dealer might have made more than $1,500 and I wouldn't have any way of knowing.

[PARTICUS]

What do you feel is a fair profit for a dealer on a $30,000.00 vehicle?

[mchastek]

What do you feel is a fair profit for a dealer on a $30,000.00 vehicle?

Interesting question!

I haven't put much thought into this, but as a consumer, I'd say maybe somewhere between $1,000 and $1,500.

I don't have a problem with a dealership making a profit. I know that's why they're in business. I do have a problem with the way the process works, and the fact that negotiating is always such a headache.

If every dealership made a flat $1,200 on a $30,000 car and it didn't matter where I went, then fine. But if I have to spend my time going back and forth between three dealerships (which is what I did) until all but one drops out, just to feel like I got a decent price, I don't enjoy doing that.

Could you explain this from a dealership's point of view? I'd be very curious to hear your thoughts.

Thanks!

[twofatguys]

If the MSRP is $30,000, the invoice is likely in the $27K range. So that's $3,000 they have to work with. Plus they have their holdback, advertising allowance, manufacturer-to-dealer incentives which are not really published where the public can see them. But a large dealer has a lot of overhead. I'm thinking 2-3%. So $600-$900 would be where I'd be comfortable. But on a $3,000 used car, if I was the dealer, I'd want to make $500-$1000 on it.

[Ray McGowan]

I wanted to make a comment although this is an old thread. The Dealer/Owner makes money in all facets of the dealership operation. I wanted to ask all a question for them to think about: When you purchase a diamond, home or clothing what do you believe is a fair profit margin? The reason I ask is because I recently met a buyer for Neiman Marcus. She showed me a women's blazer priced at $975 retail and showed me the cost ($58). I almost fell over! That's an $817 profit margin. Do you really think a dealer making a $100 over invoice (plus holdback) is a fair margin considering what consumers pay for other items (let us not forget that we must care and service the consumer for the years they own their vehicle). I just wanted to make a comment to keep things in their proper perspective.

[mchastek]

Thanks for sharing that, Ray. I hear what you're saying about extremely high profit margins on non-automotive goods, but here's where I see the difference. If I go to Neiman Marcus and I see a blazer for $975, I can choose to buy or not to buy. I would pay $975 just the same as the next person. And even though I don't know the profit margins, I know they aren't waiting until I get to the counter to tell me how much the price is.

With dealerships, I'm always afraid that I could have negotiated a better deal. And I'm always afraid that someone else with better negotiating skills (or thicker skin, more free time, whatever) got a better deal than I did. It's too much of a game.

I don't mind the dealerships making a profit. I do mind feeling like I'm being taken advantage of in the process.

[OOTG]

Ray, yes, a dealer making $100 over invoice plus holdback is fair. Consider your own example! You should be outraged to pay $975 for something that cost only $58. And Mark, you should quit calling the process of buying the car a "game". It demeans those of us who are honest, ethical, and enjoy what we do for a living. Think about this, if you hire an accountant or an attorney to perform work for you - think of their profit margin! If you don't like the process of buying a car, then pay MSRP and you should be happy because you like your car, just like someone who would go in and pay $975 for a blazer without asking for a discount because they wanted it and liked it enought to pay what was being asked of them. How lucky can one be to be able to negotiate on a car? For those of us who do this for a living and are tired of the complainers, too bad we can't all have you pay sticker price and move on to more pressing world issues.

[mchastek]

I apologize for calling it a "game." I have had some great experiences, but the not-so-great ones are what prompted me to start this thread. I've made deals on a car in less than 10 minutes and have never been more comfortable, and on the other hand, I've walked out of dozens of dealerships because I wasn't being treated fairly.

In my opinion, if there was no negotiating, no one would pay MSRP - they'd pay much less. Things purchased at retail stores are almost never purchased for MSRP, and I don't think the car business would be any different. We'd see price competition across the board until everyone came to some sort of conclusion that a fixed $X profit per sale was as low as it makes sense to go, and that would be it.

The "game" that I was referring to applies to all of the "we have a great deal, but you have to act NOW", "To be honest with you, I am not making any money on this deal", "We only had one at that price, BUT...", etc.

If you treat all customers with respect and do your best to make the process as simple as possible, I commend you. The business needs more people like you!

[Rennsport Calgary]

If it's a used car you must have at least a 25% margin in it at the $30K price level otherwise......it's useless inventory.

On cars under $20K it's 40% minimum.........

New cars are up to the manufacturer.

[cjsauto]

Have read all the past posts and would like to give a Dealers perspective. I am a working owner as well as the accounting officer of a small used car operation. I agree some dealerships have some unscrupulous operations, but us good ones are out there. It can be a win/win situation for both. Here is how a used car dealer operations work. First, Find a car that is worthy of buying - Buy the car -Pay the Auction Fees upwards of $250.00 then add floorplan (bank own credit line)and Interest (as high as 15%) plus fees every 30 days for a 90-120 day line, then add freight upwards of $175+ per car, depending on where you are buying it (don't forget to add the fuel surcharge now being tacked on) then get it to the shop, Oh boy, now the fun really begins - Pay wages to mechanic (upwards of $20.00+ per hour plus benefits) to assess. Then add the cost to fix what the car needs brakes, rotors, special order parts etc. (Don't forget to add those surcharges that vendors are now adding to deliver parts) get the car cleaned and ready for sale. Now the car is ready for sale - Gas it up $3.00+ per gallon. Ready for Test Drive. Now comes consumer who is only interested in lowest price, does not care that car has brand new parts only interested in lowest price (maybe the guy down the street has a lower price for the same car ...but does not fix his cars), consumer only interested in lowest price. They are not comparing apples to apples! I ask all of you which would you choose? A car that is backed for safety and 30 days or a car that is a cheaper price that needs repairs (I assure you, it will cost you the consumer more in the long run!) Don't get me wrong I want a fair deal along with everyone else. But what is a fair deal to a consumer these days? Going dealer to dealer to get the lowest price? What a waste of everyones time! Not to mention frustration on everyones part. Why not look at what the dealer is offering in terms how you are buying it. (Are you buying it as is?) What about customer service, warranty, friendliness, what they put into the car to make it right? Don't just look at a showroom-just because they have plasma tvs does not mean they are making money. That is for you the consumer. Just to make you feel more comfortable while visiting. What consumers fail to realize is that rent costs money, electric costs money, mechanics cost money, benefits cost money, etc. and they are rising every day. Look at the cost of New Cars. When adding all the costs associated with getting a car ready for sale any profit that you do make ends up in someone elses pocket. What I don't understand is why doesn't any one go to the local food market/chain store and negotiate the price of food or goods? The point being the car business has costs associated as do food or goods for sale. Unfortunately, the rising costs are all passed on to you the consumer. Thank you all for reading my perspective. Looking forward to hearing your comments.

[twofatguys]

And that is why there are several classes of used car dealers...

1) New car dealer's used car department
2) Straight used car dealers (cash or bank finance, nicer cars)
3) CarMax (supposedly recon to perfection)
4) Special Finance lots (JDB, Drivetime, etc)
5) Tote-the-note lots (questionable cars, low downs)
6) Cash only car lots (most cars under $3K-$5K)

Consumer can go wherever they are comfortable and can afford to go...

[bhoecht]

Love to hear feedback from those who posted these comments on this:

What if there was a GREAT and COMPLETE online shopping experience for consumers provided by dealers?

Fair market pricing backed by a guarantee, credit, interest rate, financing, rebates, trade-ins, accessories, extended warranties, protections, etc. All of it. Everything. Producing 100% complete car deal quotations.

It is new, but it exists. Click here if you'd like to see it:

http://www.ai-dealer.com/Ai-Sales_Demo.html

Follow the Begin button at the bottom of the screen.

So... what if there is a new alternative available to dealers and consumers vs. the hostile "call or email for price" and "come on in to discuss"?

Feedback and opinions are encouraged. Actually, they are exactly the point of a forum aren't they?