I was contemplating putting up a new blog entry, and I thought I’d share a recent experience I had buying my wife a new car. I should preface this by saying that this was not a task that I was looking forward to and had put it off for quite a while. Not because of financial issues or things of that sort, but because I knew that most dealers that sell new cars are places that try to take advantage of consumers. In the recent past I taught professional selling classes for many years. I read all the books, studied all the techniques, talked to lots of salespeople, and even helped students in their transactions. I’ve seen lots of pain people have experienced at the hands of car salespeople. Perhaps the most egregious was a former colleague who made the mistake of signing a blank sales contract and taking a car off the lot because the dealership’s printer was allegedly down. When he returned the next day to pick up the contract, the price it showed was several thousand dollars more than he said he agreed to pay.
What most people fail to realize is that the entire structure of buying a new car is setup to favor the dealership and the seller. Most people who buy a new car will overpay. Sometimes badly. Typically car buyers are novices–buying a car once every few years–whereas salespeople deal with customer after customer on a daily basis. At most dealerships salespeople are well trained in the art of closing. They know all the techniques. They know how hard they can push. And typically they’re hungry to make a sale.
The above is not to portray salespeople as con men. They’re just part of the machine. It’s the structure that’s the real con. The salesperson most customers deal with is totally powerless to make a car deal on his or her own. They have to “talk to the manager.” It is this sales manager who is working “the desk” who is the king of the deal. Typically a salesperson will go to the desk and be given a price that the car can be sold for. His job is to get you to go for that number. If you won’t, he’ll go back to the desk for clearance on any other deals. When the desk tells the salesperson “$27,500 out the door is a steal for this guy”, it’s his job to run with that. Nevermind that reality may be different from that. The person dealing with the customer almost never knows what the dealership will pay for a vehicle. Their job is simply to close the deal.
Many dealerships try to do right by their customers. They want good ratings on customer surveys. They want customers to feel good about the transaction. If they can get a customer to overpay for a car and still feel good about the deal overall–that’s the goal they’re shooting for. And to be totally fair, I don’t believe that’s unethical. I believe in capitalism. I believe in caveat emptor. I believe the seller should be able to set his or her own price. What I find obnoxious is the pleasure some dealers take in all this “gaming”. I despise the contemptuous manner they deal with customers. I despise the duplicity.
The tide is turning in the auto business however thanks to the Internet. Pre-Internet, car buyers had very little knowledge going into a transaction. No only were they disadvantaged in their level of experience, but they had almost no readily available information to place them on sound footing in their negotiation. In the age of the Internet however, it is hard to keep secrets. People post online exactly how much they paid for a particular car at a particular dealer. Web sites display not only information on dealer invoices and incentives, but also information gleaned from actual car transactions within a region. A knowledgeable customer can go into a transaction knowing what a fair deal is.
So, with all the above in mind, a few weeks ago my wife and I began car shopping. We quickly narrowed down our selection to a particular car and knew what features we wanted. I spent a few hours on research and knew what a fair price was. We went to a dealership and drove the car and talked with the salesperson. She was very nice. We didn’t have a lot of questions for her since I’d gotten the information on my own, but she was friendly enough and did answer several questions I asked her correctly. (I wanted to see how knowledgeable and honest she was, so I asked a few fact-based questions from my research. I made sure to ask her questions that would also test her honesty.) Part of the buying process is developing a relationship with the salesperson so that he/she feels a stake in selling you a car. On our second day of dealing with her I told her we’d buy the car from her if we could get the numbers right.
We went into the office and the games began. Interestingly, they made no pretense of selling me the car at sticker price. The first quote they gave me was for about $2,000 less than the grossly inflated sticker. The salesperson returned from the sales desk with the quote written boldly in large numbers using magic marker using very nice penmanship across the top of sales form. (Part of the psychological game. Even though most men have poor handwriting, sales managers are told to write “beautifully” to paint a picture for the customer.) She launched into a discussion of what a great price that was, how they’re in the midst of a great sale, etc. Since I knew the game, I looked at the paper, pulled out my pen, wrote down my counteroffer, and slid the paper back over to her. I didn’t say anything. (The more you talk the more the salesperson will try to use your own words against you.) Once she concealed her obvious surprise she said “I don’t see any way that we can make the deal for that amount.” I replied, “It’s a very fair offer. I know what that car should sell for. That’s what it will take to get my business.”
She very grudgingly left and went over to the sales desk. I knew exactly what was happening at that moment–which was later confirmed. The sales manager was convincing her that I was being unreasonable and she should get back over to me and convince me of what a great deal I was getting. The salesperson however didn’t do that. I think she had a pretty good read on me and she also knew how these deals typically went. She came back and said “they’re seeing if they can do it for that price.” #1 No they’re not. They can make that assessment instantly. #2 If they really told her that, they’re playing her just as much as they’re playing the customer.
Once she returned she tried one other close. After letting her go through that, I said something like “I appreciate your effort on our behalf. We’d like to buy a car from you. For us, it’s all about bottom line price. I know what we should pay. If you can sell it to us for that, I’ll drive it out of here this afternoon. If not, I’ll go elsewhere.” She said something like, “Where did you get your information?” I replied vaguely, something like “I took the time to do research and know what’s a fair price.” We then sat in silence for the next 8 minutes. (I knew the time since I pre-determined that if we hit the 10 minute mark I’d leave.) I’m not sure if the salesperson was killing time since she knew the sales manager would be upset if she came back so quickly, or if she was trying a silent pressure close. (This is a closing technique that asserts that whoever speaks first loses and so just let the customer ’stew’ on the situation and they’ll give in to the pressure and say “OK, I’ll take that deal.”) She did get me to talk first. I commented that it looked like rain was blowing in and then went back to checking my email on my phone.
She went back to the sales desk and the sales manager appeared. So far this was playing out exactly like I expected. I didn’t however expect what happened next. I’ve never encountered a sales manager like the one I met at Tri-Cities Nissan in Johnson City, Tennessee. Rather than characterize him, I’ll just continue the narrative. He attempted to convince me to pay $550 more than my offer. His incentive for this was that I would get free oil changes for the car. I pointed out to him that $550, plus sales tax on that amount, plus interest on that amount (assuming it was financed) would buy a whole lot of oil changes. I wasn’t interested in paying for them in advance. (Which, as my wife pointed out, meant they really weren’t “free” after all.) He tried a few other closing techniques on me and I told him I was just interested in getting to the number I stated. Every time I tried to talk, he cut me off. He then said to me–and this is a direct quote–”You seem like a smart guy, but you’re really dumb.” At that point I stood up, shook his hand, and said “We’ll be buying the car elsewhere.”
As we were leaving the dealership I passed the salesperson and said, “Thank you for your help. We appreciate your assistance, but he just cost you a sale.” I then turned to him (he was beside me at that point) and said “You made two mistakes. One, you wouldn’t let me talk. Two, you called me dumb. As a sales manager, that word should not even be in your vocabulary when dealing with customers.”
We went to our car, took a few breaths, and started to drive off. The salesperson “chased” us down in the lot. At that point if she offered me the car at a really great price I doubt we’d have taken it. She seemed to be very mad and perhaps even choking back tears. I genuinely felt bad for her. I told her what happened with the sales manager. I also told her my background and how I knew what her job was and that she had done it well. I also expressed my disbelief at the sales manager’s techniques. I won’t post here her very candid comments about him. I explained my process and talked to her about my offer. She very honestly said “I don’t know what they pay for these cars. They told me that your offer was too low and I needed to sell it to you for [the last price she quoted me]. I told him that you knew what you wanted to pay.” I reiterated that I felt bad for her and we left.
I drove home, emailed other dealerships in this region, and within 2 hours had a deal to buy this same car for $150 less than what I offered Tri-Cities Nissan plus other incentives that lowered the price even further than Tri-Cities Nissan was prepared to honor.
Here’s the ultimate irony. When I say “the same car,” I mean the exact same car. I spec’d out the car to another dealer who said he didn’t have a car that matched that but could get one. When we went to pick it up I asked him where he got the car from. He replied “Tri-Cities Nissan.” The car we bought from a dealer about an hour’s drive away is the same one we test drove less than 5 miles from our home. The transaction with that dealer was a pleasure.
As I’ve thought about this transaction, I’ve come to a few conclusions.
- Either the Tri-Cities Sales Manager was incompetent in this transaction or just a bad judge of the situation. I’m aware that some sales managers do try to bully people into buying a car. Perhaps he was trying that technique. If so, he lost.
- The fact that he called me ‘dumb’ so easily made me wonder how many other people he tried that on and whether it succeeded.
- It very well could be this was a case of “Internet frustration.” I’ve read reports of dealerships that are upset about not being able to drive bargains in the manner they historically have. Some dealerships have set up Internet sales departments and deal with customers coming from the online environment differently than those who walk in cold. I’ve read accounts of the disparity of how those customers are treated (typically with the Internet customers getting much lower prices). Perhaps this sales manager was upset at my unwillingness to “bargain” and lost his cool.
- I like Nissan cars, but I know one dealer I’ll never deal with again.
Two other things to mention in closing: Remember this was the exact same car I originally drove. Tri-Cities Nissan added a few minor things at the dealership to increase their profit. Those are always bogus. Proof: Not once did the other Nissan dealer ask us to pay for those things even though they were still on the car.
I wonder if the salesperson ever figured this out. She called me a couple of days later sounding very sheepish asking if we had bought a car yet. I told her we had, at a lower price, from another dealer who I named. If she checked the lot, she probably noticed that “my car” was gone. She may have inquired as to where it went. Somehow I doubt the sales manager told her that he transferred it to another dealer so that I could buy it for less than what I offered him. That would rather argue against me be as dumb as supposedly he believes I am.
