Confessions of a car salesman

[MemnochtheDevil]

Originally posted by: Zenmervolt
Honestly, if the dealership is only making a 16% markup on a car, that's really not all that great. Then again, I'm not sure how much money the service department brings in. If it's comparable though, a 16% margin isn't really that great at all. It's not uncommon for retail stores like Target to have a markup of 50%-100%, we just don't realise it that much because the nominal numbers are so much smaller.

ZV

New cars have a very slight markup, most of the time 2-5% at most. They can make a little by providing the financing, but unless you are looking at luxury brands the markup is in the hundreds on a 25K car. And holdback goes to pay for things like the physical building, heating, phones, etc. If you had a buisness wouldn't you expect to make some money?

Used cars and servicing are where dealerships make 90% of their profit. Look around at Edmunds and see all the articles and topics the forums have to offer, I hang out there quite often.

Don't start the phony invoice thing here though, you can find the invoice price on Edmunds, find the % holdback and see exactly how much the dealership will pay for a car.

 

[Spac3d]

Originally posted by: conjur

Originally posted by: Spac3d
conjur, Were you always honest with the customers? How would you characterize your dealership? Last time I was at a Honda dealer they wanted me to lease an Accord EX v6 for something like $470 a month... and that was something like 5 years ago. I laughed at him and just walked out.

I recently worked with Acura, and I thought they would be nice to deal with but they didnt even want to go below MSRP because "demand was too high for RSX" I said "Demand??? You have 7 RSX's sitting outside, there isn't that high of a demand" It took forever to haggle even 1,000 with them bleh.

Lexus has been incredibly to deal with. We have bought 3 of them from the same salesman as he has been excellent. There is little bargaining. He throws out a price, we reply to it, he talks to his sales manager and deal is done. The more Lexus' you buy the less haggling there is, thank god for the repeat customer program

Yes, I always was honest.

I'd had a few bad experiences in my days and wanted to prove to people that buying a car could be an enjoyable process. I told one customer and her husband to keep their old Bronco as they would get nothing for it on trade and they did end up keeping it.

Leasing a new Accord for $470/mo sounds rather high but I don't know the details of the deal. An EX V-6 with DVD on a 2yr lease and bought at MSRP just may very well be that much (I'd hope not, though )

Well it sounds like you had quite an experience. I am sure you also will have a differnet view when you are buying a car from now on... and now you have friends at a Honda dealer

I am sure being honest is what makes repeat customers come back, not necesarily cheap prices. You can get those prices from anywhere if you wait for the right time, but the honest, in IMO, makes or breaks the deal.

Too bad you aren't still in the business, I am sure you would of had some referrals

 

[conjur]

Originally posted by: Spac3d
Well it sounds like you had quite an experience. I am sure you also will have a differnet view when you are buying a car from now on... and now you have friends at a Honda dealer

I am sure being honest is what makes repeat customers come back, not necesarily cheap prices. You can get those prices from anywhere if you wait for the right time, but the honest, in IMO, makes or breaks the deal.

Too bad you aren't still in the business, I am sure you would of had some referrals

Yeah...it's all about building rapport. I wouldn't buy a car at invoice from someone that made me feel like I was being grilled by the cops but would pay $1000 over for someone who made it enjoyable and promised great service.

Actually, one of the things we did there was offer a great service to the customer. If, for some reason, they could not bring their vehicle in for service, we would go and pick it up, have it serviced, and bring it back to them. That's worth something to many people.

 

[Spac3d]

At one dealership, which sold high-end Japanese cars, a manager named Sid reviewed my application.

"But you don't have any experience selling cars," he said, as if I had misrepresented myself.

I went back to the formula that had worked so well.

"No, but I want to make a lot of money."

"Really?" he said. "How much do you want to make in, say, a month?"

I remembered Michael saying they made three or four grand in the first month. So I repeated this figure.

Sid burst out laughing: "I got guys out there makin' 20, 25 grand a month."

"You're kidding."

"No," Sid said, "I'm telling you, man, this is the big leagues."

Did anyone find that interesting besides me? I know for a fact that at the local Japanese luxury dealership, the salesmen make at least $10,000 a month selling cars. I am sure their good ones make maybe $200,000 a year, but $20g a month:Q

I guess in SoCal(right location?) Japanese luxury cars rule.

 

[Spac3d]

Originally posted by: conjur

Originally posted by: Spac3d
Well it sounds like you had quite an experience. I am sure you also will have a differnet view when you are buying a car from now on... and now you have friends at a Honda dealer

I am sure being honest is what makes repeat customers come back, not necesarily cheap prices. You can get those prices from anywhere if you wait for the right time, but the honest, in IMO, makes or breaks the deal.

Too bad you aren't still in the business, I am sure you would of had some referrals

Yeah...it's all about building rapport. I wouldn't buy a car at invoice from someone that made me feel like I was being grilled by the cops but would pay $1000 over for someone who made it enjoyable and promised great service.

Actually, one of the things we did there was offer a great service to the customer. If, for some reason, they could not bring their vehicle in for service, we would go and pick it up, have it serviced, and bring it back to them. That's worth something to many people.

If you enjoyed it, how come you went back to IT? You love IT? Better money?

 

[TallBill]

cool read, i'll have to finish it up later

 

[conjur]

Originally posted by: Spac3d

Did anyone find that interesting besides me? I know for a fact that at the local Japanese luxury dealership, the salesmen make at least $10,000 a month selling cars. I am sure their good ones make maybe $200,000 a year, but $20g a month:Q

I guess in SoCal(right location?) Japanese luxury cars rule.

There's a guy here in town at the Chrysler/Dodge store making $250k/yr. That's $20k/month! And he's kicked people out of the showroom before when they offer up some insanely lowball price for a new car. "You're offering what? You're insane! Get out of here!"

LOL!

 

[Spac3d]

Originally posted by: conjur

Originally posted by: Spac3d

Did anyone find that interesting besides me? I know for a fact that at the local Japanese luxury dealership, the salesmen make at least $10,000 a month selling cars. I am sure their good ones make maybe $200,000 a year, but $20g a month:Q

I guess in SoCal(right location?) Japanese luxury cars rule.

There's a guy here in town at the Chrysler/Dodge store making $250k/yr. That's $20k/month! And he's kicked people out of the showroom before when they offer up some insanely lowball price for a new car. "You're offering what? You're insane! Get out of here!"

LOL!

Is that a local salesman or is that a general manager? I could see a general manager making that money, but a salesman telling someone to get out:Q

 

[conjur]

Originally posted by: Spac3d


If you enjoyed it, how come you went back to IT? You love IT? Better money?

Because I've been a developer/network admin since I got out of college in '89 and it's what I really know. And, to make $100k/yr in car sales you have to REALLY work at it. And work long hours, too. As it was, I was pulling 9am-9pm 2-3 times/week and working till about 8-9pm on Saturdays. It was taking too much time away from me being with my girls the weeks I have them.

 

[kleinesarschloch]

Originally posted by: conjur

Originally posted by: Spac3d

Did anyone find that interesting besides me? I know for a fact that at the local Japanese luxury dealership, the salesmen make at least $10,000 a month selling cars. I am sure their good ones make maybe $200,000 a year, but $20g a month:Q

I guess in SoCal(right location?) Japanese luxury cars rule.

There's a guy here in town at the Chrysler/Dodge store making $250k/yr. That's $20k/month! And he's kicked people out of the showroom before when they offer up some insanely lowball price for a new car. "You're offering what? You're insane! Get out of here!"

LOL!

wow... you weren't kidding when you said there is hardly any markup at all

where do you think that money comes from? he can make 250k/year only because someone payed WAY more then they should have.

 

[conjur]

Originally posted by: Spac3d

Is that a local salesman or is that a general manager? I could see a general manager making that money, but a salesman telling someone to get out:Q

Ayup...regular salesman. He sells so much they just let him do whatever it takes. He rarely takes an 'up'. Most of his business is off referrals and repeat customers

 

[conjur]

Originally posted by: kleinesarschloch

wow... you weren't kidding when you said there is hardly any markup at all

where do you think that money comes from? he can make 250k/year only because someone payed WAY more then they should have.

Chrysler/Dodge has more markup than Honda. And, like I said earlier...paying too much is in the eye of the customer. If a customer is treated exceptionally well and likes the salesperson and the services offered and really likes the car, then paying a hefty profit is not a concern to them.

Also, used cars is where the real profit is for a dealership/salesperson. Think about it...they offer wholesale $ for a trade and turn around and sell it avg. market price. If you have the time, it's always best to sell your trade yourself and not trade it in.

 

[Spac3d]

Originally posted by: conjur

Originally posted by: Spac3d

Is that a local salesman or is that a general manager? I could see a general manager making that money, but a salesman telling someone to get out:Q

Ayup...regular salesman. He sells so much they just let him do whatever it takes. He rarely takes an 'up'. Most of his business is off referrals and repeat customers

Man that is awesome. If I was him, I would raise my kids to be just like me so the referalls can keep running just in the family

 

[Zebo]

Originally posted by: MemnochtheDevil

Originally posted by: Zenmervolt
Honestly, if the dealership is only making a 16% markup on a car, that's really not all that great. Then again, I'm not sure how much money the service department brings in. If it's comparable though, a 16% margin isn't really that great at all. It's not uncommon for retail stores like Target to have a markup of 50%-100%, we just don't realise it that much because the nominal numbers are so much smaller.

ZV

New cars have a very slight markup, most of the time 2-5% at most. They can make a little by providing the financing, but unless you are looking at luxury brands the markup is in the hundreds on a 25K car. And holdback goes to pay for things like the physical building, heating, phones, etc. If you had a buisness wouldn't you expect to make some money?

Used cars and servicing are where dealerships make 90% of their profit. Look around at Edmunds and see all the articles and topics the forums have to offer, I hang out there quite often.

Don't start the phony invoice thing here though, you can find the invoice price on Edmunds, find the % holdback and see exactly how much the dealership will pay for a car.

All new MSRP's are between 16-18%.

Go to carpoint and take MSRP - Invoice/ MSRP x 100% and you'll see.

And conjour Fair? Fairs got nothin' to do with it. It's what you can get the car for. He doe'nt like it work someplace else or open a new business. You don't like it don't buy. Use classifieds or costco car program. Personally I buy from dealers auctions using my buddies licence and cut out the dealer and salesman.

 

[Spac3d]

Originally posted by: conjur

Originally posted by: kleinesarschloch

wow... you weren't kidding when you said there is hardly any markup at all

where do you think that money comes from? he can make 250k/year only because someone payed WAY more then they should have.

Chrysler/Dodge has more markup than Honda.

Also, used cars is where the real profit is for a dealership/salesperson. Think about it...they offer wholesale $ for a trade and turn around and sell it avg. market price. If you have the time, it's always best to sell your trade yourself and not trade it in.

I would imagine when you give a dealer a trade in, they make at least $1k right there, maybe 2 if they are robbing you, plus the sale of the new car, which could easily be 2k if it is an import, a lot more for a domestic. 4k profit for a deaelr for a few hours work, do that a few times a week and you are making some serious money.

 

[conjur]

Originally posted by: Carbonyl

And conjour Fair? Fairs got nothin' to do with it. It's what you can get the car for. He doe'nt like it work someplace else or open a new business. You don't like it don't buy. Use classifieds or costco car program.

Not everybody is out to get invoice price. Heck, I had a customer come in and buy a Honda Pilot and signed on the first pencil (almost full MSRP). She needed a 4x4 as they live on top of a hill way out in the boonies and in wet weather/snow, their minivan would not make it up.

Fair is in the eye of the customer. Invoice may be fair to you. $1000 UNDER invoice may be fair to someone else. $2000 OVER invoice may be fair to yet another customer.

 

[conjur]

Originally posted by: Spac3d

I would imagine when you give a dealer a trade in, they make at least $1k right there, maybe 2 if they are robbing you, plus the sale of the new car, which could easily be 2k if it is an import, a lot more for a domestic. 4k profit for a deaelr for a few hours work, do that a few times a week and you are making some serious money.

Depending on how old the vehicle is, there could be up to $10k in profit if a used car sells at asking price. Trouble is, the salesperson who brought that trade in typically doesn't get to share in the profits...only the salesperson who sold that used car. (A common complaint I heard)

 

[Zebo]

Conjour see my edit: I'm sure you are very resonable man. It's a shame more are not like you.

 

[conjur]

Originally posted by: Carbonyl
Conjour see my edit: I'm sure you are very resonable man. It's a shame more are not like you.

Yeah...would be much easier to buy a car

Well...off to get the kiddos!

 

[Spac3d]

Originally posted by: Carbonyl

Originally posted by: MemnochtheDevil

Originally posted by: Zenmervolt
Honestly, if the dealership is only making a 16% markup on a car, that's really not all that great. Then again, I'm not sure how much money the service department brings in. If it's comparable though, a 16% margin isn't really that great at all. It's not uncommon for retail stores like Target to have a markup of 50%-100%, we just don't realise it that much because the nominal numbers are so much smaller.

ZV

New cars have a very slight markup, most of the time 2-5% at most. They can make a little by providing the financing, but unless you are looking at luxury brands the markup is in the hundreds on a 25K car. And holdback goes to pay for things like the physical building, heating, phones, etc. If you had a buisness wouldn't you expect to make some money?

Used cars and servicing are where dealerships make 90% of their profit. Look around at Edmunds and see all the articles and topics the forums have to offer, I hang out there quite often.

Don't start the phony invoice thing here though, you can find the invoice price on Edmunds, find the % holdback and see exactly how much the dealership will pay for a car.

All new MSRP's are between 16-18%.

Go to carpoint and take MSRP - Invoice/ MSRP x 100% and you'll see.

I just did a test on Lexus and the markup is 12.00% 4-6% extra markup is a lot once you start dealing with 50k+ cars

Edit: Honda Accord is marked up 9.8%

 

[OutHouse]

"Hell no. They never go for a demo if you ask them. 'Cause they know they're weak. If they drive it they'll buy it. The feel of the wheel will seal the deal, my friend. So you got to kidnap them, man. Just slam the door and take off. Come on, let's go."

HAHAHAHHAH

 

[MemnochtheDevil]

Originally posted by: conjur

Originally posted by: Spac3d

Is that a local salesman or is that a general manager? I could see a general manager making that money, but a salesman telling someone to get out:Q

Ayup...regular salesman. He sells so much they just let him do whatever it takes. He rarely takes an 'up'. Most of his business is off referrals and repeat customers

And the high selling salesman (or saleswoman ) also hit the incentives from the manufacturers that provide a big chunk of their wages. Thats why can sometimes get a great deal near the end of the month. If the salesperson or the dealer is near an incentive, they can sell the vehicle at or below cost to get the incentive money.

Again with the luxury brands (BMW, Mercedes, Lexus) you are always going to pay much closer to MSRP than invoice unless you buy a lot of cars from that dealership. Luxury brands are where good salespeople can make a ton of money. But customers at that level expect you to jump through flaming hoops for them....

Carbonyl,
Yeah, most MSRP prices are 12-18% more than invoice. Sorry if I took that the wrong way, I just see so many people at Edmunds saying that you should take 2k off the invoice price and start negotiating from their. They think the invoice pricing is all a scam or something. It's actually a fairly transpearant system now that all the info is available on the internet...

 

[Zebo]

Originally posted by: Spac3d

Originally posted by: Carbonyl

Originally posted by: MemnochtheDevil

Originally posted by: Zenmervolt
Honestly, if the dealership is only making a 16% markup on a car, that's really not all that great. Then again, I'm not sure how much money the service department brings in. If it's comparable though, a 16% margin isn't really that great at all. It's not uncommon for retail stores like Target to have a markup of 50%-100%, we just don't realise it that much because the nominal numbers are so much smaller.

ZV

New cars have a very slight markup, most of the time 2-5% at most. They can make a little by providing the financing, but unless you are looking at luxury brands the markup is in the hundreds on a 25K car. And holdback goes to pay for things like the physical building, heating, phones, etc. If you had a buisness wouldn't you expect to make some money?

Used cars and servicing are where dealerships make 90% of their profit. Look around at Edmunds and see all the articles and topics the forums have to offer, I hang out there quite often.

Don't start the phony invoice thing here though, you can find the invoice price on Edmunds, find the % holdback and see exactly how much the dealership will pay for a car.

All new MSRP's are between 16-18%.

Go to carpoint and take MSRP - Invoice/ MSRP x 100% and you'll see.

I just did a test on Lexus and the markup is 12.00% 4-6% extra markup is a lot once you start dealing with 50k+ cars

Edit: Honda Accord is marked up 9.8%

I just did two lexus' both 15%. I gave you the wrong eqaution is why the discrepancy..

It's MSRP - Invoice/ invoice x 100%

 

[Spac3d]

Originally posted by: MemnochtheDevil

Originally posted by: conjur

Originally posted by: Spac3d

Is that a local salesman or is that a general manager? I could see a general manager making that money, but a salesman telling someone to get out:Q

Ayup...regular salesman. He sells so much they just let him do whatever it takes. He rarely takes an 'up'. Most of his business is off referrals and repeat customers

And the high selling salesman (or saleswoman ) also hit the incentives from the manufacturers that provide a big chunk of their wages. Thats why can sometimes get a great deal near the end of the month. If the salesperson or the dealer is near an incentive, they can sell the vehicle at or below cost to get the incentive money.

Again with the luxury brands (BMW, Mercedes, Lexus) you are always going to pay much closer to MSRP than invoice unless you buy a lot of cars from that dealership. Luxury brands are where good salespeople can make a ton of money. But customers at that level expect you to jump through flaming hoops for them....

Carbonyl,
Yeah, most MSRP prices are 12-18% more than invoice. Sorry if I took that the wrong way, I just see so many people at Edmunds saying that you should take 2k off the invoice price and start negotiating from their. They think the invoice pricing is all a scam or something. It's actually a fairly transpearant system now that all the info is available on the internet...

That is a good point. A lot of people are unaware that buying at the end of the month is usually a win-win situitation for everyone. Dealers get rid of their older cars sitting on the lot, salesmen can boost sales, and it usually ends up being a better deal for the consumer. Unfortunately our car lease is up on December 4th. Damnit.

 

[MemnochtheDevil]

Originally posted by: Spac3d

Originally posted by: MemnochtheDevil

Originally posted by: conjur

Originally posted by: Spac3d

Is that a local salesman or is that a general manager? I could see a general manager making that money, but a salesman telling someone to get out:Q

Ayup...regular salesman. He sells so much they just let him do whatever it takes. He rarely takes an 'up'. Most of his business is off referrals and repeat customers

And the high selling salesman (or saleswoman ) also hit the incentives from the manufacturers that provide a big chunk of their wages. Thats why can sometimes get a great deal near the end of the month. If the salesperson or the dealer is near an incentive, they can sell the vehicle at or below cost to get the incentive money.

Again with the luxury brands (BMW, Mercedes, Lexus) you are always going to pay much closer to MSRP than invoice unless you buy a lot of cars from that dealership. Luxury brands are where good salespeople can make a ton of money. But customers at that level expect you to jump through flaming hoops for them....

Carbonyl,
Yeah, most MSRP prices are 12-18% more than invoice. Sorry if I took that the wrong way, I just see so many people at Edmunds saying that you should take 2k off the invoice price and start negotiating from their. They think the invoice pricing is all a scam or something. It's actually a fairly transpearant system now that all the info is available on the internet...

That is a good point. A lot of people are unaware that buying at the end of the month is usually a win-win situitation for everyone. Dealers get rid of their older cars sitting on the lot, salesmen can boost sales, and it usually ends up being a better deal for the consumer. Unfortunately our car lease is up on December 4th. Damnit.

So go shopping at the end of november....