Car Buying HQ

A deal from Saturday.

Car Guru — Mon, 26 Oct 2009 02:14:34 +0000

I negotiated a deal this weekend from the Sales Manager’s side, and I couldn’t believe what I saw.

I could have priced my vehicle at any price and she wouldn’t not have cared. The only thing on her mind was getting the most money for her trade. Rate, term, and price was not on her mind.

The lady wanted “cash for clunker” value for her trade even though the program has been done for awhile. Using Kelley Blue Book as a tool I was easily able to get her to take less for her trade. Unlike most managers who would take advantage of this lady I tried to teach her something, here is what it was.

I told her it isn’t just the value of her trade, but the price I am selling her our car for. I gave her a couple of examples, and she looked at me with “deer in the headlight eyes”. It seems the last store she was at was over pricing their vehicle to show her more money for her trade. Smart decision by them with her hot button being her trade value. I gained her confidence and we sold her a car. I would say I earned a customer for life. I would rather sell a lot of vehicles to a customer and all their friends at a lower profit margin instead of only getting them once for a huge profit.

Yes we made a profit, which we should, but she could have easily save herself some more money on her trade, the vehicle she was buying and the interest rate. With the right tools, and tactics she could have easily proposed a better offer, and won.

Negotiation is it needed?

Car Guru — Wed, 14 Oct 2009 02:56:44 +0000

What is the chance you are going to be a good negotiator? To get a great car deal do you need to be a great negotiator?

According to Wikipedia, Negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. It is the primary method of alternative dispute resolution.

To answer the above question, YES!

Negotiation does not need to be a long drawn out affair. From the dealer’s side, the salesperson is suppose to get a commitment from you. Once the commitment to purchase at a certain price or payment is made the negotiation becomes easy for the dealer.

From the consumer’s side having the ability to make an educated offer using the dealer’s information leads to very little negotiation. The right starting point and the ability to show your offer comes from education and not “pulling it out of your ass” goes along way. If you knew:

The true value of your trade
The true value of the dealership’s car
The amount of days the vehicle was in stock
The Supply and Demand of your trade and the vehicle you were purchasing
The break-even point for the dealer
The buy rate for your financing
The process of the dealer
The few word tracks to lead them to close on your offer
How to make an educated offer
The right questions to ask about the vehicle you are buying
The right questions to ask about the vehicle you are trading in

Do you think you could save yourself hundreds maybe thousands of dollars on your vehicle purchase? I know you would and I would be scared to be on the dealers side of the desk.

59 impala

Car Guru — Mon, 12 Oct 2009 14:30:38 +0000

: 59 Impala

I have been out of town without internet hunting, but cars are never out of my mind. Here are a couple of pictures of a 59 Impala my brother-in-law did. $51,000 invested and appraised at $70,000. The pictures are in a garage without lights so they do not give the car justice. Couldn’t take it outside, because of snow.

Lease ads

Car Guru — Thu, 08 Oct 2009 03:37:40 +0000

Don’t get up in advertising on a lease, and remember to negotiate. You will probably see a lot of lease advertising hitting the airwaves soon. It is a sure fire way for the manufacture to move cars in the short term. I hope it doesn’t happen, but if it does here are some things to look out for.

Always remember to negotiate your car deal before you mention you are leasing. Do not fall into the trap of negotiating payments. Negotiate the price of the car first, then your trade if you have one, then the money factor. The money factor or lease factor is a number like .00375, and that is not 3.75%. It is 9% (multipy the factor by 2400 to get an interest rate.

When you finance a Car $20,000 equates to the same payment, not true in leases. Because of different residuals, the guaranteed price you can buy the car for at the end of a lease, lease payments will be different on same priced cars. Be careful, cars with great residuals can look very attractive…..negotiate.

Any questions just ask.

Lease ads are very confusing for the customer and most salespeople. Most ads will be at the lowest mileage allowed for that particular leasing company; show 10% cash down or equity in your trade; plust tax title and license down. This upfront out of pocket costs are huge to get there advertised payments.

Trunk Monkey goes to work

Car Guru — Tue, 06 Oct 2009 01:51:29 +0000

Here are some more funny videos. This company has a lot of good one. This is the first time I saw this particular one.

Click here to view the embedded video.

How much are my payments

Car Guru — Tue, 06 Oct 2009 01:38:58 +0000

I am amazed everytime a person looks at a $20,000 car, with no money down, and can’t believe it does not work out to $200 a month. If I had a dollar for everytime…….

My sales person does a great job. He does an outstanding presentation. The customer is drooling. Then we present numbers and the customer says they will take it for $200 a month. Maybe my salesperson didn’t do such a great job. He should have had that information, making sure he is on the right car. The customer isn’t going to step down to a different model, losing face. They will only leave with their new found information and buy somewhere else.

I teach my salespeople, if they do quote a payment, figure $20 to $25 per every thousand financed for a 60 month term. Now my salesperson needs to be smart enough to know what cars will qualify for what term. To make it easy for you when you are looking at cars here are “money factors” for 4 different terms all at 7.9% .

36 months .0313
48 months .0234
60 months .0202 (here is where I get the $20 per thousand financed)
72 months .0175

For example let’s assume you are financing $15,000

36 months – $15,000 x .0313 equals a payment of $469
48 months – $15,000 x .0234 equals a payment of $365
60 months – $15,000 x .0202 equals a payment of $303
72 months – $15,000 x .0175 equals a payment of $262

Not only does this information help you decide which vehicle fits in your budget, but also you will be able to see if the dealer is being honest with you in his computation of the payments. I always believe having an informed buyer makes the sale easier. They trust me more. They are realistic.

Remember when you get to this point it is only math.

Just for fun

Car Guru — Mon, 05 Oct 2009 04:07:57 +0000

These are funny, if you never have seen these watch them. Have a great night

Click here to view the embedded video.

Why I want the consumer to negotiate the correct way

Car Guru — Mon, 05 Oct 2009 02:56:34 +0000

Martin still wants to know where the win-win is at. Here is how it goes.

At this point in time the only 16% of car buyers leave the dealership with a new or used car. Yes, 84% leave without buying a car. Why do they leave?

Miss information
Unreasonable expectations
Terrible impression of the dealerhip or salesperson
Pre-conceived ideas
Not the right vehicle

Just to name a few.

I believe if the consumer has the correct information the closing percent will increase. This means happier customers, happier salespeople, happier managers and happier owners. Here are two different scenarios to look at.

First, my dealership sells 100 cars at an average of $1500 gross profit per car sale. This gross profit is the total of the sale of the car and the finance products sold. Total Gross of $150,000.

Second, my dealership sells 50 cars at an average of $3000 gross profit per car sale. We have the same total Gross Profit $150,000.

Which dealership do I want? The first one. I have twice the customers: more referrals; more service work; more parts sales; more word of mouth advertising. My internal service and parts gross also increases because of the increased inventory that is needed to satisfy the sales demand.

If I can get my service department to generate enough gross to cover all the expenses of the store, known as 100% absorption, then seventy cents of every dollar of gross from the sales department goes directly to the bottom line. The other thirty cents pays for selling expense.

So in a nutshell. I want people to have a great experience, knowing they are getting a great deal at a fair profit. In return I will sell more cars, building my dealerships service business. If people know what to expect they should approach car buying differently than what they do now.

Dealer closed by the government

Car Guru — Sat, 03 Oct 2009 23:51:58 +0000

This upsets me! The reason that dealers were suppose to be closed was there were too many dealers. This doesn’t fit into negotiation, but it does fit with Rob Northrup’s Buggin In post today. Come on America, it is time we let the three legislative branches do what they are intended to do; do not give one branch to much power.

Click here to view the embedded video.

Why does negotiation break down?

Car Guru — Fri, 02 Oct 2009 18:09:45 +0000

The negotiation process of car buying is more complicated than what is commonly thought. Why is that? And the process of buying used cars is different than buying new cars.

We recently interviewed a potential salesperson at he store I work at, and his answer to my quesions set me back in my chair. First, me interview process starts with asking the interviewee what he thinks the car business is, and how it works. This way I know upfront what kind of deproggraming that needs to be if I hire the person.

A simple question was asked. “How is a car deal worked once you have found the perfect car for the customer, meaning what it the negotiation process?” His answer went something like this, “It’s easy you go out and show the car then when the customer says no, you drop $2000, and when he says no again, you just keep dropping until he says yes. Once he says yes you sold a car.”

Not a shocking answer. That is what most people think, and I can’t blame them. Their only experience might have bee that, or they learned so old school tips from Dad.

I followed up with, “two thousand dollars, and then you drop more, how much mark-up to you think a dealer has in one of his used cars?” Quickly he answered, “you go out and buy most of your cars at auction for around $2500, bring them back and sell them for whatever you can get the customer to yes to.”

Are you serious, does the general public really think this way, or did I just fall upon a wierd situation? I think this is where the negotiation process breaks down. Lack of knowledge. Is it his fault? No. Should I expect a different answer to my question? Probably not. After years of asking the same question, I get somewhat of a same answer. I think it is all common sense, because I deal with it every day. Sometimes you need to sit back, and realize why would they know anything about my business, I don’t know anything about theirs.

If you don’t have the correct knowledge, you do not know where to start in a negotiation, and that isn’t only for cars. How do you find the correct information? Ask the right person, someone you trust to guide you down the right path.