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129 Cars

thisamericanlife.org

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Re: 129 Cars

#51

Post by ryanmarsh »

yitchelle wrote: post #23
johnthedebs wrote: post #4

I listened to this podcast the other day and it was one of the more compelling This American Life episodes I've listened to recently. I say that as a pretty big fan of TAL. They spend the episode interviewing car salespeople and managers at one particular dealership over the course of a week (IIRC), where the salespeople are trying to rack up a certain number of sales to qualify for a bonus payout that means the diff…

"The way the salespeople negotiate between two different parties – on one side with the customer, on the other side with their manager" This is what really struck at me. I was really surprise at how isolated a car sales guy is, even within the same dealership. It truly is every guy for themselves. Is this situation ripe for a disruption?

It is very ripe for disruption and has been for decades. The entire model (as other commenters have stated) is protected by law at the behest of a special interest lobby.

I sold new cars for a while. The dealer really should just be a showroom staffed by manufacturer sales people with perhaps some bonus structure. Instead it's filled with middlemen whose children will only eat if they can convince you to pay more for the car than a more efficient market would allow for.

If you watch the movie "Suckers" you'll understand the "asshole" culture of car sales. Unfortunately it's really that way because you have to be an asshole (a taker) to survive.

Re: 129 Cars

#52

Post by bane »

mitchell_h wrote: post #50
bane wrote: post #37

Car salesmen can be interesting people if you get them to drop their guard a bit and chat. A surprising number of them are simply transiting through car sales to make ends meet between their main career. In a rough economy, car sales is almost always a way to get a short-term job. Of course the negotiation part is annoying and time-wasting. I suppose for every person that gets a good deal, 10 get a bad one and that's…

I grew up around (mostly large, high volume) car dealerships. Dad was a mechanic and was friends with the sales folks. Car sales people come in two flavors, the career guys. These are the guys that know cars and what gets people to buy them. They make good money(knew one guy that was over 300k/yr, he was an extremely rare dude.). This is the vast majority of the guys you'll see in large dealerships now days. The sale…

> Now days the sales guy can do some of that, but in the end the big saving for consumers is in the financing office.

Yeah, it's astonishing how much the car will cost you after you pay everything off through the loan vs. the agreed upon price. A 10% interest rate on a 5 year $30,000 car loan costs $8,244.68.

It's not uncommon for people with so-so/bad credit to get rates in the 20+%. A 22% loan on $30k over 5 years costs almost another $20k! That's like buying an entire extra car!

Re: 129 Cars

#53

Post by hoprocker »

johnthedebs wrote: post #4

I listened to this podcast the other day and it was one of the more compelling This American Life episodes I've listened to recently. I say that as a pretty big fan of TAL. They spend the episode interviewing car salespeople and managers at one particular dealership over the course of a week (IIRC), where the salespeople are trying to rack up a certain number of sales to qualify for a bonus payout that means the diff…

> I listened to this podcast the other day and it was one of the more compelling This American Life episodes I've listened to recently.

Agree. Rarely have I felt so riveted to what was going on. I attribute it to the pace and the chronology. Unlike many TAL shows which are told in retrospect and/or are multi-parters, this one is a single storyline with the actors right there, on air, dealing with the conflict and resolution before our ears.

Re: 129 Cars

#54

Post by notahacker »

chrisbennet wrote: post #34
praptak wrote: post #12

Earlier quoted context omitted.

> "Let's go over this: they are in a car dealership..." Yet another reason why physically going to a dealership seriously weakens your negotiation position as a buyer. Mail, phone or fax multiple dealerships and do not enter one before getting a good offer.

Something I read in a book about buying cars once: If you go to the dealer, test drive the car, etc. (basically take up some of the salesman's time) you can negotiate a better deal than if you just walked in or called and said "This is my price, take it or leave it." The reason this works is because the salesman has a "sunk cost" in dealing with you for the last half hour and is reluctant to let that time be wasted b…

A competent salesperson (a category which probably excludes many car salespeople...) doesn't fall for the sunk cost fallacy, but they - and their manager - might still be more inclined to offer the deepest possible discount if you've spent the last half-hour actually showing a genuine interest in buying a car, not least because by that stage there's little more they can do to influence your perception of the value of the car.

Re: 129 Cars

#55

Post by Maven911 »

Does anyone have any other good american life episodes ? I love shows where they intersect business, operations and people issues.

Re: 129 Cars

#56

Post by revelation »

mschaef wrote: post #25
rallison wrote: post #13

A quite enjoyable and interesting piece by TAL. One aspect that I found interesting is that Manny, the guy inspired by Sun Tzu and without much inherent interest in the cars themselves, actually fared poorly in sales [1]. This sort of salesman is exactly the sort of person I always want to avoid when I am looking at purchasing something, so I am glad to see his techniques were not all that effective. Overall, the pie…

> Basically, I find the current dealership model's incentives to be largely mismatched to the actual needs of consumers. Agreed... the current negotiation model seems guaranteed to ensure that the customer walks away feeling screwed. If you buy, there's always that lingering worry that there was money left on the table.

Just because the car dealership isn't making money doesn't mean you are not being screwed anyway.

Re: 129 Cars

#57

Post by sejje »

functional_test wrote: post #31
dnissley wrote: post #26

Earlier quoted context omitted.

But why? It's the same number in the end. Is my willingness to play this type of game worth $500 to the sales person?

It shows good faith. It shows your willingness to negotiate. You can go through life upset that the world doesn't work the way it "should" - you can even refuse to participate like the original poster. But you will generally have a worse outcome, so is it worth it? Why not play along, just a little? Same thing goes for: dressing up (why should it matter if I'm in a suit?), sending thank yous (why should it matter if…

I don't think this matters as much when dealing with a professional negotiator. He has less feeling involved.

With a private party, I agree with you.

Re: 129 Cars

#58

Post by sejje »

rokhayakebe wrote: post #22

This is me at a used car dealership Wednesday, the 1st. HIM: $13,999 ME: $9,500 HIM: Oh no no no no.(click click click - on his computer). Ok ok, this is what I can do for you $13,499. I take blah blah .... 5 minutes later ... HIM: Ok $10,000 and that is my final. ME: $9,500. In the end I didn't buy it. It's just amazing how we shaved $4000 off in less than 5 minutes. This industry needs to be regulated.

Interestingly, I have a friend who works at a used car dealership. She did a report and their average profit is $4500 per car.

Maybe you took all his play out of it, and he really needed the $500 to make the deal.

Re: 129 Cars

#59

Post by rokhayakebe »

fsckin wrote: post #24
rokhayakebe wrote: post #22

This is me at a used car dealership Wednesday, the 1st. HIM: $13,999 ME: $9,500 HIM: Oh no no no no.(click click click - on his computer). Ok ok, this is what I can do for you $13,499. I take blah blah .... 5 minutes later ... HIM: Ok $10,000 and that is my final. ME: $9,500. In the end I didn't buy it. It's just amazing how we shaved $4000 off in less than 5 minutes. This industry needs to be regulated.

That doesn't sound like a negotiation.... if you had started at $9,000 and come up $500 at the end you might have gotten it.

I'll tell you something. Next time I am negotiating I will start HIGH and go LOW. It won't work, but I would love to see the face of the sales guy.

Re: 129 Cars

#60

Post by stevewillows »

My Dad has sold cars for as long as I've known him. He was a top salesmaster for GM for several years in Canada.

The interesting thing I found each this podcast is how consistent it was with the stories he'd tell us over dinner. We always thought he was just having a tough time with poor management, but it seems that he's not alone. Since moving to fleet many years ago, the dealer would often sell cars at a loss so they could not only hit numbers to be ranked #1, but also for the incentives from the manufacturer.

One thing the show left out is the unbelievable amount of paperwork involved in quoting someone an accurate price. Also, the amazing shuffling of cars that goes on between dealers. With certain models only being built for a short period of time, the custom orders take hours and hours of hunting and pecking. On the consumer side it feels like I ask for a bunch of stuff for my car and a week later it shows up as expected.

As others have noted, this is an industry primed for a major disruption. The tools most car salesman use on a daily basis haven't really progressed since they left typewriters.

The other major struggle for the industry is that a lot of salesmen have been salesmen their whole lives and don't want to retire. Thus, there's an office full of 70 to 80 year old hanging around while the other half runs ragged to make a few hundred bucks.

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