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Car dealers are fair. Really.

From Banovsky, Featured Contributor
Posted on September 21, 2009
Filed under Advice , vLane, Opinion, used car, Car dealer, Original

This post comes courtesy of our resident racing driver and auto dealership insider, Jameson Riley. You can find him on the web at JamesonRiley.com and Driven Clothing.

used dealership sign
[Photo credit: munkabum on Flickr]

How much does a car really cost? Twenty years ago, your guess would have been as good as mine. But today, you have several options (which I'd rather not list here because that would defeat the whole purpose of this piece). (But I will: Edmunds, Kelly Blue Book, etc. — Ed.)

These options are the bane of the automobile retail industry.

Imagine that you walk into your local major electronics retailer to buy a new flat screen television. You find the exact television you want, and so you turn to the salesperson and say with an authoritative tone, “I want to buy this television for $500 less than what you paid for it, and I want a free set of A/V cables.” Re-read that last sentence. Even as I write this, I can’t help but think how ridiculous that statement is, and how disgustedly the salesperson would look at you.

Now with this new point-of-view in mind, does it still make sense to walk into a car dealership commanding at the salesperson that you will only buy the car for less than cost and you need floor mats thrown in?

Click through for the rest.

Why is this message of pummelling the car dealer broadcast across so many forms of media? Before resources such as the Internet and television as we watch today, news and information traveled at a significantly slower rate, and therefore when a customer was taken advantage of by a car dealer, their poor experience typically stayed within a very small community of friends and family.

Slowly over the years via word-of-mouth and newspaper, car dealers developed the negative reputation as cheating thieves who made tons and tons of money, and this reputation may very well have been deserved.

With the advancement of communication, especially within the last ten years, businesses in any industry are now more accountable for their actions than ever, and rightly so. I’ll be the first to say that a customer of any product should be well educated about what they are purchasing, especially when buying a car, most commonly the second largest purchase in one’s life (second only to a home.) But there is a difference in being well educated in a product, and being provided with the same pricing information as the retailer.

Dealership owners and employees are normal people working to make a living, put food on their tables, pay the rent, buy diapers. Any hard-working person in any industry deserves the opportunity to earn money for their efforts, in many retail venues, salespeople are paid on commission, which means the less money they make (or the more they lose) on a car sale, the less money they earn.

Would you appreciate working hard in your industry every day, only to have a negative message constantly distributed to your customers and clients describing how much of a crook you are?

Yeah, I didn’t think so.

I understand that certain websites and informational resources aim to help the customer find a “fair deal” and not be burned by the dealer, but retailer costs don’t need to be revealed to achieve this. For example, help compare actual recent sale prices from local dealers and encourage dealer-to-dealer competition; make the dealers work to earn your business, don’t barge into the showroom commanding they lose money.

Oh, and just for your own information, we don’t make $10,000 on every car sale, much to your belief and dismay. Today, we’re lucky if we make $100 on a car sale, and yes, that includes “back-end” money.

Why do you think so many dealers are out of business?

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Banovsky is a featured contributor for vLane.
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Comments for this article

Displaying 1-3 of 3 comments
  • Flag
    From Autonerd
    Commented on September 21, 2009

    I agree, the idea of going into Target and demanding to buy a stereo for $20 above invoice is a little nuts. That said, there's more to what a dealer makes than the sale price. That's why there's an F&I department. Financing, extended warranties, dealer-installed options and accessories are all areas where dealers make more profit. I'm the son of a car dealer and I know what the possibilities are. If you're only making $100 profit on every sale, you're doing it wrong.

  • Flag
    From Jameson Riley
    Commented on September 21, 2009

    Autonerd:

    We've been in business for over 50 years, so I highly doubt that we're "doing it wrong". This piece was intended to focus on the sale price of the car, not the financing and other possible profit generating options. I could easily write another post just about F&I and parts sales, but that's not what this post is about.

  • Flag
    From Blanchard Hyundai
    Commented on September 21, 2009

    Great article. As a Dealer myself, it is almost hard for me to go into another retail business, ask to speak to the manager and ask for a discount on something that i need to buy. Like most people in our business, i choose to focus on who deserves my business based on the level of customer support i will be getting in the future. I feel that a professional job, deserves professional wages and i am happy to pay it. With the economy in the shape that it is in, and the dealer environment that exists today (gm and chrysler dealer closings) if you are still in business it is because you are taking care of the customer.

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