November 08, 2003

confessions of a car salesman

After our excursion to the car lots last weekend, we've been doing a lot of research. Buying a car from a dealer, particularly a new car, is one of those known quicksand patches -- they'll grab your leg and then you're stuck in the muck, sucked down into the dread depths of financial doom. Thank god for the web. Edmonds.com is teaching us what the cars are going for, what to look for, how to negotiate. Kelly Blue Book shows us the invoice price (the price the dealers pay the manufacturer -- everything above that is their profit), a true starting point for negotiations (click on "new car pricing" at the top left). And this article on the Edmonds site was the biggest treat. A reporter went undercover as a car salesman at two car lots: first a high pressure place selling hot Japanese cars, then a no-hassle lot selling American cars. Reading about his experiences, I finally got what goes on behind the scenes. For instance:

At times Michael became very excited as he thought of new things to teach me. At one point he said, "Oh! This is a good one! This is how you steal the trade-in." He looked around quickly to make sure no one overheard him. "When you're getting the numbers from the desk, they'll ask if the customer has a trade-in. Say it's a '95 Ford Taurus. And say you took it to the used car manager and he evaluated it and said he would pay four grand for it. If you can get the trade for only three, that's a grand extra in profit.

"So what you do is this," Michael pretended
to pick up the phone again, "you ask the desk,
'What did we get for the last three Tauruses
at auction?' Then they'll give you some figures
they'll say, $1,923, $2,197 and $1,309.
You don't have to say anything to the customer.
But he sees you writing this down! And he's
going, 'Holy crap! I thought my trade was worth
$6,000.' Now it's easy to get it for $3,000.
That's a grand extra in profit. And it's front-end
money too!"

The writer's conclusions are as sobering as you'd expect:

While working as a car salesman I became impressed with the damage a bad car deal can do to the budget of an ordinary person. In one case, I participated in leasing a car to a couple at well over its value. I was haunted by the thought that this nice ordinary couple had trusted me, and I had let them sign a contract that would bind them for five years to a high-interest lease. I consoled myself thinking perhaps another dealer would have inflicted greater damage. How did the car business get so screwed up? There's nothing else in our society that is sold with the consumer so conspicuously unprepared.

Dan and I keep thinking: thank god we didn't rush into buying a car last weekend. We'd have been just as unprepared.

Posted by Tamar at November 8, 2003 11:16 PM