Shopping for new cars isn’t as bad as people say. Oh, it can be a demeaning, insulting experience, unfair and wasteful of time and energy, but one might get a very good price. One would also have earned it.
This is too often the case. The consumer is asked to make an offer, which plunges him into a charade of counteroffers, changing antagonists, artful offstage action and much posing and posturing. The system ultimately pits consumers against each other, dependent on their ingenuity to get one of the dealership’s lower prices. It may leave even winners, says one, feeling “manipulated, abused and angry at the whole industry.”
The puff in some prices is immediately evident in the premium, or “supplement,” that some dealers add to the manufacturer’s suggested list price. It’s there, says one salesman, “because some people just pay the price without question.” It also gives the dealer instant bargaining room (“Listen, I’ll take off $1,000"). One Southern California dealer advertises that he’ll pay $3,000 for any trade-in at all, whatever condition; it’s covered by his $3,000 supplements.
Hesitant consumers may be offered an extra $100 or so “discount,” then asked to make an offer. Some timidly take off another few hundred; some go right down to an estimated wholesale cost (roughly 80% to 90% of manufacturer’s list). One chummy salesman even suggested offering $8,000 on a $9,250 car, just to get the process started.
The offer, however casual, is carefully written up for presentation to some off-stage authority--"the boss” or “my manager.” The idea, says Guy Wirsig, operations director of Los Angeles’s Better Business Bureau, “is to get the buyer psychologically committed, with a contract form and all, and then say, ‘Sorry, I wasn’t authorized to give you this price.’ ” (In retaliation, former car salesman Darrell Parrish says, consumers could “learn how to consume time, flow with the salesman, using three man-hours of theirs for every one of yours. When they have so much time invested in you, they start listening.”)
Laughter From the Wings
Backstage personae are important: The salesman, an ally, repeatedly goes off to plead the consumer’s cause, each time stumbling back, spent, from the wings. “They laughed me out of there!” reported one salesman. “There’s a lot of arguing going on back there!” said another.
Sometimes there’s no one behind the curtain. Or “sometimes the manager will say ‘Let these people sit for a while,’ ” says one salesman. “It’s all psychological.”
Such volleying may go on for a while, often involving surprisingly large increments; one car went quickly from $16,836 to $15,982 to $14,758 to $14,078. The word “invoice” is usually introduced, implying a price approaching dealer cost, as in “You’re below invoice!” or “Would you pay X dollars over invoice?” Few consumers, of course, know what the factory invoice really is, and few dealers will tell them, fewer yet will show them and almost none will produce invoices revealing special discounts that lower their cost.
Some dealerships have “turnover” operations, meaning that the salesman/ally turns customers over to a “closer” for price negotiation. Closers have practiced routines. One held customers virtually captive, pushing them to sign a contract while they waited for the “trade-in manager” to return their car keys. Others try to “close customers on payment,” focusing on monthly payment arrangements (“Can you pay $300? $250?”) and avoiding the gross price of the car.
The goal is immediate purchase. “A car is an impulse buy,” says a salesman. “If you let people leave the lot, their excitement dies and you lose them.” Customers who want to think things over may be told it’s a now-or-never offer, and salesmen calling with follow-up offers urge them to come in. “I’m not allowed to quote prices on the phone,” said one, “but it’ll be worth your while.”
Shrugging Off Criticism
Car manufacturers shrug off criticism of dealer sales procedures at associated dealerships. “Our surveys show that many people are uncomfortable when going into a car-buying situation,” says Ford spokesman David Krupp in Detroit, but “the dealer can do anything he wants.”
He also does what he’s taught, at least in part by manufacturers--General Motors’ 31 sales training centers, perhaps, or Ford’s “marketing institutes,” where salesmen learn everything from how to deal with customers to how to present a car.
If people really dislike this routine, why does it continue? Some say it gives buyers what one woman customer calls “a kind of macho pleasure.”
“They like to feel they got themselves a discount,” says a car man.
It continues also because it redefines “competition,” saving the dealer from having to compete with other vendors by offering attractive prices (or service or selection) across the board. Better to let consumers compete for the available bargains.
“Why do you go through this numbers game of marking up and negotiating down?” cried one frustrated consumer. “Because we make more money this way,” smiled a sales manager.