[jferrell]

Man is it ironic I read this thread today, a guy I've followed up with months just send me this.

"My justification for the price - I have an offer of $250 over invoice for an order/PCD from an out of state dealer. Since this creates some hassles I’d much rather work with a local dealer, plus it’s only fair to give you a chance to match what he can do."

Match 250 over invoice? Wow thanks for the opportunity, so now I'm invested because I've spent so much time and have to go beg my sales manager to sell the car at 250 over invoice otherwise I've wasted my time for nothing and some guy in some other state gets a flat for 30 minutes of paperwork, he'll never even see this guy.

[Ali.K_BMW]

Originally Posted by jferrell

Man is it ironic I read this thread today, a guy I've followed up with months just send me this.

"My justification for the price - I have an offer of $250 over invoice for an order/PCD from an out of state dealer. Since this creates some hassles I’d much rather work with a local dealer, plus it’s only fair to give you a chance to match what he can do."

Match 250 over invoice? Wow thanks for the opportunity, so now I'm invested because I've spent so much time and have to go beg my sales manager to sell the car at 250 over invoice otherwise I've wasted my time for nothing and some guy in some other state gets a flat for 30 minutes of paperwork, he'll never even see this guy.

It gets worse.

[tony20009]

Originally Posted by jferrell

Man is it ironic I read this thread today, a guy I've followed up with months just send me this.

"My justification for the price - I have an offer of $250 over invoice for an order/PCD from an out of state dealer. Since this creates some hassles I’d much rather work with a local dealer, plus it’s only fair to give you a chance to match what he can do."

Match 250 over invoice? Wow thanks for the opportunity, so now I'm invested because I've spent so much time and have to go beg my sales manager to sell the car at 250 over invoice otherwise I've wasted my time for nothing and some guy in some other state gets a flat for 30 minutes of paperwork, he'll never even see this guy.

You can't honestly think that a buyer should pay more than the lowest price they can negotiate? It sounds clear to me that your customer

• Seems to understand how the car business works
• Doesn't see the value in buying from you store as opposed to a different store

Ultimately, for you, it comes down to whether you want to deliver the car or let some other salesman do it. For the dealership's owner, it's a matter of whether there is profit in the sale at that price or not.

For potential buyers of cars who don't fully understand car business economics, here's some background and real facts that you can use to negotiate the best price on a car. Yes, if you are successful at this, you'll screw the salesperson's commission, but as a buyer, it's your job to minimize the price you pay.

Given the nature of the car business -- profit from the sale of the car minus cost to put the car on the lot/floor (floorplan) minus commission = dealer gross profit -- the customer's best negotiating position is obtained by separating the salesperson's objectives from the dealer's objectives. The reason for this is simple, and I'll explain it in just a bit.

Like all retailers, for car dealers there is a strategic continuum on which profit can be earned. At one end, they can seek to make money by selling large quantities of product at lower prices. At the other end they can sell less product at higher prices. Like all retailers, dealers maximize profit (from car sales rather than profit from providing car service.) by finding the right balance between those two extremes. Additionally, dealers are motivated (by the car company or the finance company) to move higher volumes because it improves the dealers negotiating position with the car/finance company as goes the cost paid to obtain vehicles and as goes the dealer's priority rating in getting vehicles. The reason for this is also because loans (to businesses) work on the same continuum; therefore volume matters also to lenders.

Thus ordering a car usually puts the customer in the best negotiating position because the customer is haggling price over a vehicle in which the dealer's objectives -- profit, borrowing leverage, and priority -- are met, and the salesperson's objectives are superseded by those of the dealership. Exceptions to this rule are, for example, cases such as when there is so much floorplan invested in a vehicle that the dealership knows it cannot sell the car at a profit and is thus willing to just move the thing to "stop the bleeding."

Let's look at why this is so. Consider that you (a dealer) go to a lender (bank, government, finance company, etc.) and they agree to give you the sum of money it takes to obtain a car, say $45K. The loan is collateralized by the car itself (because you and the lender know/believe you plan to and can sell the car, that is, the car is your inventory) therefore you put no money down. Now, you must make payments on that loan, so at the end of the first month, you will do so, let's say that it's $500. We'll say too that the retail price of the car is $50K and, as said earlier, the manufacturer sold the car to you at $45K.

Now, on the 13th day of the second month, you sell the car for $48K. Your profit (excluding commission since I've not included a salesperson in this scenario) will be:

$48K - $45K - $625 = $2375.


($625 represents a proration of the payment amount for the portion of the second month that you had the car. Or in other words, the amount of the second loan payment you owe the lender for the use of their money for 13 days.)

As you can see, in 43 days, the you have turned $625 into $2375. You calculate the rate of return on that investment...Additionally, it would not surprise me if the monthly payment amount I've used in this example is far higher than reality, but even if it's not, it doesn't matter. They key is that dealers make huge amounts of money due to the incredibly high rates of return they earn on their invested cash. So the next time you hear, "Oh, we can't sell it at that price; that car just got here yesterday." Smile and just keep pushing for your price; there's nearly no floorplan invested in such a car.

Now, let's say that you get a customer who wants to order a car. What does that customer do? He puts down a deposit. What do you think that deposit is? It's at least the amount of money the dealer needs to get the car to his lot. In most cases, it's more than enough to get the car on the lot; thus, the deposit is free money the dealer can play with for as long as it takes to get the ordered car to the lot. So let's say, for example, the dealer must borrow $500 for each car he wants to put on his lot. The ordering customer gives a $2000 deposit. That becomes either three more cars the dealer can put on his lot at a cost to him of zero, or most likely it's three floorplan payments for cars already sitting on the lot. Let me rephrase that: that's three cars that for one month cost the dealer nothing to put them on his lot. Thus the dealer is using the ordering customers', not his own, money to finance keeping cars on his lot. Dealers love this!!! (Do you begin now to see why car businesses are all about the cars sold in a month?) And here you thought that the phrase "No money down" applied only to buying houses...

So now, for the car you, Mr. Customer, want to order, whose money got the car on the lot? It wasn't the loan from the lender, it was the customer's money; your money. And how much is the dealer's investment in that car? Zero. So now we are talking about the dealer making profit while having invested no money to obtain that profit. And therein lies the power of ordering a car rather than buying one off the lot. how often would you let someone walk into your store and say: I'll give you $250 for free?

Another factor to consider is something called "full absorption." When a dealership is fully absorbed, all it's operating costs are covered by the income produced by the service part of the business. That is why you never see a new car dealer (and few used car dealers) that doesn't do service. (You do see service operations that don't sell cars.) In general, if you see a dealer that's been around for a long time, they are fully absorbed (or damn close to it).

(Next time you are are the car store, and not negotiating the price of a car, ask them if they are fully absorbed. Smile broadly and congratulate them if they tell you, "Yes." You just dramatically improved your negotiating position. If they tell you, "No," you may want to make a comment such as:
Really? Did you folks have some weak managers for a time? What I mean is, I'm surprised that for as long as you've been around you haven't yet reached, or you have lost, that status. Why should I buy a car from you knowing that the continued existence of your store still depends on car sales, which we both know is highly susceptible to economic fluctuations, to cover your costs? Any manager you are talking to will get the point.)

As a customer, what does full absorption mean to you? It means that when you are negotiating for a car, your ability to split the dealership's profit motive from that of the salesperson is improved. Here again, given that the dealer puts cars on the lot via floorplan and the dealer is fully absorbed, the profit from the sale of the car is less critical and the quantity of cars sold becomes more important.

So now, the question is, how often will you let someone walk into your store and say to you: I'll give you $250 for free and you won't even have to pay administrative overhead or salesperson commission on it because the service department operations already has that covered? Change that $250 to $1000 and how often would you do it? ($250 is the amount over invoice price the customer is offering...)

When a customer can establish a negotiating position that pits the dealership's profitability against the salesperson's profitability, it likely sucks for the salesperson because the offer from the customer, though yielding no meaningful commission for the salesperson, lets the dealership make a satisfactory profit or advances a volume target. Thus by negotiating on an ordered vehicle, the customer pits the dealer's interests against the salesperson's, and strategically speaking, that's the best position the customer can be in.

It is for these sorts of reasons that I try to buy cars that very recently arrived on the lot or order cars. Indeed, I'd be completely outraged, and tell the GM so, if they thought I were going to walk in and give them some huge amount of my money that provides them with an infinite rate of return (the rate of return on zero invested is infinite), and lets them use my money, interest free no less, to get the car there and using my money to finance at least one other car already there.

One final note: you can be sure that if the dealer obtains the car you want from another dealer, you are definitely paying far more that you should for that car. Again, the reason is simple: that car costs the dealer more than do the cars already on his lot. Indeed, you are paying so much more that you could travel to the car you want (by plane even), negotiate a price and drive home for less than the excess you are paying to have your dealer obtain it from another dealer.

[tonmonde]

some people are cheap, i stick to my CA, and he takes care of me.

[Outlaw 06]

Originally Posted by zackday30

Eh, true etiquette is to deal with the inital salesperson as I understand it. But hey, if you do not like the original salesperson, I don't think there is anything wrong with asking to speak with someone else. Nobody really wants to buy a car from someone they don't like. Especially knowing that they are the ones going to be paid the commission on it. I work in sales and relationships are half the battle IMO.

+1. If you don't like a particular salesperson (and/or dealership) then look for someone else. Inquiring at 4 different dealerships with 5 salespeople each = 20 potentially different personalities (and deals).

[jferrell]

As a retort to the somewhat long explination of profit let me say this, the less the ten sales people make the less they spend in local economy. Unless your job is in no way influenced by consumer spending(doubtful) you are once again screwing yourself.

You're an account manager for a OEM supplying parts to a game system manuf. which starts to sell less, they buy less and your pay is cut(bonuses, etc..)

You're a dentist and people start to hold off on regular visits because they have less income forcing them to make decisions like food for their children or routine cleaning so your customer base drops.

You're a marketing director and dispite you're best efforts sales of your product are still down, the President and board decide you aren't a worthy investment giving the low rate of return.

You screw each other and yet no one seems to care unless they are on the directly visible loosing side.

[GTR-Dad]

Treat others like you'd like to be treated. (This is the Golden Rule for those whose parents failed to teach it.)

What comes around goes around. (You will get what you deserve sooner or later.)

I have no time for a-holes or victims.

Just because you're the customer doesn't make you right. Read the CA's post and reflect on what he says. Lot's of truth there!

On the other hand, if you don't like how your customers treat you, find new ones! Or a new job.

The world doesn't owe you a pleasant car buying experience, nor does it owe you a living.

[David 12]

I think the majority of us are more than happy to reward and expect great customer service when buying a car. Interestingly, I have had more trouble buying a car from the same manufacturer as my previous car. You would think customer loyalty would be rewarded but it has not in my experience.

I have gone from Acura to BMW to Porsche and left not because of the service from the salesperson but because I could not reach an agreement on a fair price for the new car. I would have been more than happy with another 335i or M3 but my price quotes when my 335i lease was up were horrendous. So I researched the Porsche and got a great deal.

I guess my point is fairness, honesty and loyalty must be earned and are truly a two way street (or as Tony stated a three way street; Customer, Dealership and Salesperson.)

jferrell - in your post above you make some great ideological big picture points, if the world was perfect or even fair! I agree with you but as we know life is not always fair and the average car buyer probably does not take into account the points your are making when purchasing a car. In a perfect/fair world, yes of course they would.

Dave

Former car: 2007 335i

[Yankees 2010]

All car salesmen are scumbags when it comes to trying to sell u the car. Just go there with a set price in your head and stick to it.

[tony20009]

Originally Posted by jferrell

As a retort to the somewhat long explination of profit let me say this, the less the ten sales people make the less they spend in local economy.

Those ten sales people would need to be in an extremely small town for this point to actually have any practical relevance. As a practical matter, the macro-economic landscape of the United States is such that there aren't enough car sales people in the entire country for a decrease in their earnings, resulting from car buyers' negotiating low prices, to have the kind of impact you suggest.

As an academic matter, sure what you say is correct; however, since your point is just academic, it's worth noting that car sales peoples' wages are just the price of their labor. Thus if they cannot sell their labor to car dealerships and car consumers at a price that is acceptable to the sales people, they will either accept the lower wages or exit that business and find another. If they exit, other folks who find the wages acceptable will enter and replace them. At some point the price of car sales peoples' labor stabilizes. It stabilizes at the the point where dealer profits are maximized and car prices are minimized.

As an aside, it really doesn't make sense (other than from the dealership's perspective) why car sales people accept commission wages rather than straight salary. Commissions make sense when a sales person has no obligation to the maker/owner of the product being sold and the sales person can control the price negotiation with the customer. In a car dealership, the sales person has no such control. Thus the commission model merely becomes a way for the dealership to minimize its labor cost.

A solution to your dismay with the wages is not to decry customers' successfully obtaining the lowest price possible, but rather to form and join a union. That will make the price of cars go up, of course, and that would have a huge impact on the economy because it affects not ten sales people, but rather thousands buyers of the product who formerly were able to obtain a lower price using the tactics I noted above, for they would potentially not buy the product at all because to costs too much.

Finally, I would be happy to discuss all sorts of economic principles with you, but let's not hijack this thread topic with that conversation. PM if you'd like to continue this line of disucssion on economics.

[GTR-Dad]

Originally Posted by tony20009

....but rather to form and join a union.

Nooooo!!!!!

Oh wait, sarcasm follows!

Don't forget that society owes everyone a living. <insert your own sarcasm here as I lack the time to craft as witty a response as Tony's. >

Dan

[tony20009]

A question comes to mind: what can one salesperson do for me that any other salesperson cannot do for me? I frankly don't see any particular value in being loyal to any given salesperson.

They don't control the price of the car; they don't control the warranty or service I receive on the car. They don't make the car any better, and all they want is that I pay more for the car so they can earn a higher commission. I don't see a win-win situation emanating from any aspect of my relationship with a salesperson. I see them a little more than parasites in the overall process of the purchase transaction. (Although I don't think that as individuals they are necessarily scumbags; some of them are nice people, but that's hardly enough reason for me to pay more for the car.)

So why would the customer want to do anything that increases their pay when doing nothing that increases their pay results in the customer obtaining the same things.

[BALLAJL15]

Originally Posted by tony20009

A question comes to mind: what can one salesperson do for me that any other salesperson cannot do for me? I frankly don't see any particular value in being loyal to any given salesperson.

They don't control the price of the car; they don't control the warranty or service I receive on the car. They don't make the car any better, and all they want is that I pay more for the car so they can earn a higher commission. I don't see a win-win situation emanating from any aspect of my relationship with a salesperson. I see them a little more than parasites in the overall process of the purchase transaction. (Although I don't think that as individuals they are necessarily scumbags; some of them are nice people, but that's hardly enough reason for me to pay more for the car.)

So why would the customer want to do anything that increases their pay when doing nothing that increases their pay results in the customer obtaining the same things.

Well after reading through all this my 2Cents is that it is "the right thing to do" to stick with the initial sales person that you meet with. Now, if he/she is not "meshing" well with you then by all means ask for another person. The salesperson realizes or at least should that the customer wants the lowest price possible and if you can not supply it then they will find a dealer that will. I don't understand how JFerrell can be so upset that he spent time working on a deal with some one just for them to go through another dealer offering a lower price. Who would pay more just to keep YOU happy? Family maybe? Then again that might not even be true. In the end if your pricing is not up to par with other dealers most people will walk as they should. You as the dealer have the right to say "no" to an offer and we as the customer have the right to find a dealer that will say "yes".

[tony20009]

Originally Posted by BALLAJL15

Well after reading through all this my 2Cents is that it is "the right thing to do" to stick with the initial sales person that you meet with. Now, if he/she is not "meshing" well with you then by all means ask for another person. The salesperson realizes or at least should that the customer wants the lowest price possible and if you can not supply it then they will find a dealer that will. I don't understand how JFerrell can be so upset that he spent time working on a deal with some one just for them to go through another dealer offering a lower price. Who would pay more just to keep YOU happy? Family maybe? Then again that might not even be true. In the end if your pricing is not up to par with other dealers most people will walk as they should. You as the dealer have the right to say "no" to an offer and we as the customer have the right to find a dealer that will say "yes".

[jw95275]

@jferrell:
In the end it's all about price. The problem with American culture is that you think good service should be rewarded, rather than it being the definition of a salesman. You get me the best price on the car the first time I see you, you have my trust and business. Call me 2-4 weeks later to match my price, I'm going to negotiate it down even more. It's a conflicting job, since the sales manager wants to get the highest price for a car at that time, but if you want business, you convince that sales manager on the price I want even if car is day 1 on the lot. No sales means no $$ for you, period. Go blame the dealer, not the customers Also, dealers in the city and suburbs should be able to beat prices of rural dealers based on volume alone, it shouldn't be the other way around.

[jferrell]

Well to conclude this let me say I left car sales. I've been at it for years and it's an industry that is going in the wrong direction for a sales man.

Here is how a dealership I know pays their people and why it just doesn't pay to play anymore;

Suppose you go to buy an Alpine 328i with automatic trans, premium and value package with an MSRP of 38,050 and an invoice of 35,590 including MACO and training. At MSRP this represents of profit of 2,460. Most dealerships pull out a "pack" probably 1% of cost which means your payable gross is 2104.10. Most highline dealerships have a flat 20 percent and sell say 8 or more units and make 25 percent of that amount. So at MSRP that 328 pays you $420.82. Suppose you work 40 hours a week and do this twice a week and your hourly wage is 21 dollars an hour. Awesome.

Except reality hits. We have a flat of $300 we get paid if the profit drops below a certain point or in this case $2000 profit(how many people settle for $460 off a 3 series).

At this point the industry is pretty much earning you flats as we've pointed out people don't want to pay 6 to 7 percent profit margins(you'd be pissed to know you pay more profit dollar amount wise in a TV then a car sometimes, I used to run a big box retailer for 8 years) So let's say you sell 10 cars at flats, $3000 grand that's awesome right? Well if I was 21 years old and could wait the 90 plus days it takes to build enough clientel to sell 10 cars a month and make that that's fine but the truth is you'll probally put more like 60 hours a week in average around 12.50 an hour.

I have a wife, a two year old and one on the way so I just decided it wasn't for me. The people who were the biggest pain in the ass when it came to price still believed we made four or five thousand in profit when in reality we may have made hundreds and then they would do what we call nibbling, light bulb, a second detail, my windshield looks kind of scratched, etc..


There are those of you that say why not sell all your cars at the cost the customer wants to make the flat. Let's evaluate;

20 cars at flats is $6000 plus whatever bonus is out there at the time, make sense to me I'd do it.

Except sales managers aren't idiots. When salesman start shafting them to make their own pay higher your deals stop being approved and you get weeded out because as with any business you thrive on profit and if you're salesman is cutting that just to get the unit it doesn't make sense to keep him or paying him the sale amount.

I worked in midline sales for a while that had a pay plan like this, for every unit you sold the percentage you took went up one percent i.e. 5 cars, 5%, 12 cars 12%, 20 cars 20%. It was a volume dealership and you could probably sell 10 to 20 cars but it was midline and people want to know how far below invoice you'll sell so if you were lucky enough to sell 20 cars and make a bonus you may be around 2000 to 3000 dollars, plus also remember they take out the min. wage they've already paid you.

The pay will get lower and lower and the older salesman even the ones worth a damn will leave, a younger more inexperienced crowd will come in the same ones flipping burgers the week before and you'll hate their apathy and general ignorance of the product and the cycle will perpetuate itself. In 3 to 5 years you'll order cars like you order the books from Amazon and while that's fine for most forum go'ers it's not for everyone. Engineers, Programmers and web designers bitch about outsourcing and the indians, brazilians and chinese undercutting their pay and salesman bitch about people not wanting to pay the profit. The only ones not bitching are the ones we are all working for, unless you're self employed, but even the sales managers and GM's are feeling the pinch.

Let me tell you what kind of finished it off for me, the guy who sat behind me had been in the business five years, he has three kids and is getting his masters in divinity, a overall good guy. He had a 23 year old kid call him and ask for a particular car for 506 a month with 4500 down. He cut the money factor, did this, did that and the kid came in. The kid said, wait a minute I'm only going to pay $500 over invoice, I won't pay a doc fee or a markup on the money factor. The guy said but I got you the 506 a month with 4500 down and the kid cared more about the profit he was paying then the payment he asked for.

Let's just be honest we hate sales man because they are trying to make money for themselves but isn't that we're all doing, screw whoever we can to get whatever we can and bitch when we don't get as much as we wanted? I've been lied to by more customers then salesman.

I've managed or been in sales for 10 plus years, sales isn't a job that can be outsourced so people like tony20009 will try to squeeze the profession to as little pay as possible by paying as little as they can I hope the world reciprocates your outlook on however you earn your money. To jw95275, if I give you 500 over invoice is that the "best price" it's such a relative term, and everyone will beat everyone until they can't. If I give you 500 over, someone will do 450, 400, 300, 250 until they can't go lower because they are at cost. Why do people insist on buying cars as close to cost as possible. I suppose it's the advice "buy as close to invoice as possible" that bothers me, what do you care what the cost is so long as it's within you're budget. If I want to buy a consumer electronic and can't find it cheaper then I'd like I don't buy it or buy used, the cost of that product may be cheaper but I don't call each retailer and ask for their "best price".

And guys just so you know people's general ability to care so little about car salesman wasn't hurting me like oh should I lease a 328 instead of a 335 it was more like 45 bucks a week for food for three people and never going anywhere with my family. There are very few Rolex wearing car salesman anymore and those that are, are screwing their employer by working them and maximizing bonuses and flats. It'll work for now but when the flats go down to 200, and 100 they'll be right where I am, driving a Mazda.

[tony20009]

First off, congratulations on your decision to exit car sales. I think it's a totally crappy job as there is no synergy between the interests of the salesman and those of the principals in the car buying process -- the dealer and the customer -- and it's therefore difficult to make a good living at it. And the simple fact is that in order to give that salesperson $45, given a 20% commission, I have to spend $225, and were I to finance the car, it'd cost me even more. You'd have more success, quite frankly, just asking me for $45.

In any regard, I do wish you much success in whatever it is you pursue.

Originally Posted by jferrell

Let's just be honest we hate sales man because they are trying to make money for themselves but isn't that we're all doing, screw whoever we can to get whatever we can and bitch when we don't get as much as we wanted?

I don't hate salespeople, but I'm not going to lie and tell you that the salesperson's and my interests are, in a negotiated purchasing situation, the same.

Originally Posted by jferrell

I've managed or been in sales for 10 plus years, sales isn't a job that can be outsourced so people like tony20009 will try to squeeze the profession to as little pay as possible by paying as little as they can I hope the world reciprocates your outlook on however you earn your money.

Don't think that my clients don't try to get me to cut my fees; they do try. But the fact is that when I'm sitting there showing them demonstrable proof of how I can save them $60 million cash per annum, and in return for that I want them to pay me/my firm $20 million to implement the strategy, they are looking at $40 million savings in year one alone, and that quite frankly is very appealing to them. And who else has the resources to enable them to realize these savings? Nobody. So it's not like they are going to the competition and they are hardly going to say no.

Now don't get all focused on the amounts of money I'm talking about, that's not really the point. And don't get me wrong, not everything I can offer my client sells itself so effectively and we certainly sell services that clients see as commodities. Sometimes, we win these commodity bids, and when we do, most of the time, we make money, mostly because we manage the project very well, and nearly never because there's all that much profit in the billing rate. Indeed, there are definitely cases where we use our size and financial power to substantively "buy" the client's business. We do this when we decide strategically that it is worth it to get our foot in the door, learn more about the client and their business, create opportunities to educate the client about the value we can bring to them, and position ourselves to eventually offer them a far more profitable set of services. And make no mistake, those highly profitable services provide a big win for both parties involved.

The big distinguishing factor is that I educate the client and I create a win-win situation for myself (because you can rest assured I'm getting paid), my firm and my client, and every time I do it well, the client is far less price sensitive. Moreover, I am selling a differentiated product. Now you tell me, when did a car salesman ever do those things? (Actually, I relate below an anecdote about one car salesman who did exactly this, and as you'll see, I totally paid him for it. In truth, I was thrilled, hell, I was friggin' grateful, he enabled me to buy a BMW!!!)

The simple fact is that cars, to most buyers walking into a car store, are commoditized products and you are right to choose a different career, for your lamentations lead me to believe you haven't found a way to successfully differentiate your product. (Truthfully speaking, I don't really see much difference between the upper end of BMW's fleet and similar cars from MB or Audi, and after you read my story below, you'll understand why that's so.)

Most drivers don't give a tinker's dam about the "ultimate driving machine," at least not when they walk into the BMW store. They know they aren't going anywhere near a track and may never drive the car faster than 85 mph, and so they have no idea of the blast they and their BMW can have together. And more germane to this thread, most car salesman do nothing whatsoever to alter their perceptions. So how the hell are such salesmen going to make any good money? They won't!

Customers didn't walk in to buy your great companionship or your deferential and/or coddling comportment. They walked in looking for a car that'll make them feel something. So show them what they came to buy, give them a taste of the feeling they can experience any day of the year if they buy a BMW. Show them that your car will make them feel better than any other car out there. There is little doubt that the car is capable of doing just that.

I know this to be so because, as I mentioned in another post on here, even my 93 year old dad can tell the difference. Even at his advanced age, he is buying a 3er partly because he wants an inconspicuous car, but in large measure because I let him drive mine, and it made him feel something. Also he likes it's looks. He's got two very nice cars, but he hates the handling of both. After 40 years of driving luxo land yachts, the man just wants to feel the thrill of driving a bit more before he dies so he's getting a 335. (I'm just hoping the "pre-Chrismas morning" anxiety doesn't kill him before it arrives. In the meantime I just let him drive mine when we hang out together.)

Originally Posted by jferrell

... If I want to buy a consumer electronic and can't find it cheaper then I'd like, I don't buy it or buy used, the cost of that product may be cheaper but I don't call each retailer and ask for their "best price"....

Perhaps you should let your fingers do the walking mor e often; you might find a few more greenbacks staying closer to home. Price haggling is a lost art here in the States. In many places abroad, one can and must bargain for nearly everything...

Less jovially, however, I cannot deny that car sales people were screwed irrevocably the first time some car dealer agreed to haggle on price. The fact is that if you have a product that is perceptively different and better (in the customer's mind) than the competition's, you should never yield (significantly at least) on price for to do so is to admit that price is more important than the product. At that point, you might as well be selling pork bellies. The sad fact too is that the car magazines make it pretty clear that the the differences between a BMW and Audi or BMW and Benz are minimal and/or subjective at best, except at the limit at which point the differences become clear. So that's where a good salesman takes the customer because below that, there really isn't a difference and the car is just a commodity.

Now, I will relate to you the story of how I came to be a committed BMW owner in the hope that it'll illustrate my points.

Handling: A Hard-On
At the time in early 1993 I was thinking about buying a new car sometime in the next six months. I was just out of college, earning a decent salary, looking pretty good and wanting to up my image a bit. So, I went to the BMW dealership because I'd read so many good things about them in the automotive press, but I'd never driven one. And quite frankly, a BMW never cramped anyone's style.

I told the salesman I currently had an Accord coupe that was well appointed (frankly it was loaded, jet black on tan leather, and had a spoiler on the back), had a manual tranny, that I was actually quite happy with the car and I enjoyed driving it.

As we stood outside his store, he asked me what I knew about BMWs. I told him the truth; I knew only what I'd read in magazines.

Just about then, the drizzle that'd been falling changed to rain and we hustled quickly to get into a 1993 325 sedan for which he had the keys in his hand. I drove with him for about 30 minutes to the base of a mountain. Then he told me to take the next right and head up the mountain. Soon a sign appeared indicating a curve and suggesting 25 mph. Now this I'll never forget.

He said, "Keep both hands on the wheel, keep your foot on the gas and take that turn at 60 mph." Mind you he's telling me this as it was raining at a steady rate, not heavy but definitely raining.

I said, 'What?" He said, "Just keep both hands on the wheel, your eyes on the road, don't change gears and do it."

I did! I was amazed that I was able to do it! I'd never before felt so exhilarated driving anything, not even a bike or motorcycle.

We proceeded up and down the mountain for about 15 more minutes. He, giving me instructions, and I following them, zooming around the turns one after the next and feeling more and more confident after each one. I was having the time of my life! But more importantly, he had me doing things I had no idea I could actually do!

When we got back to the car store, I asked him about the price of the car. It was more than I could afford, but he said that I could get a basic 318 for what I had to spend. We hopped into one and went back to the mountain. It didn't have as much power, but it was still quite peppy and I had just as much fun; it ate up those turns like it was made to do nothing else. And I felt like a million bucks!

I told him I wanted to figure out how much I could get for my Accord and maybe I could find a way to buy a basic 325 after all.

He told me that I didn't have to decide right that moment. He said the best thing I could do was compare the BMW with other cars that interested me, even take my Accord up the mountain.

Well, I did just that. I also went and tried out a Benz and a sporty Nissan/Datsun. I didn't feel anywhere near as confident; I was sold. I knew I could never be as good a driver in any other car as I could in a BMW. The car was a drug and I'd in those few moment become an addict.

About a week later, my Accord was involuntarily "liberated," and I made a beeline to the BMW store and bought my first BMW. (I didn't even report the theft of my Accord until after I'd bought my 318.) It was a very bare bones 318i. It had a/c, power windows and locks, a sunroof, the basic radio, no car computer and heated vinyl seats.

So, anyway, at the car store, the salesman told me he could take $200 off the sticker and give me a set of floor mats. I didn't quibble one bit about the price; shit, I was just falling all over myself that I was getting a Bimmer, a friggin' Bimmer, dude!

And after my test drive, I then knew what that really meant. I had the coolest toy a young guy could buy and yet, judging by all the fools that for about the same price bought something else, I was on to something those folks knew nothing about. I mean it, I was on top of the world.

Now, maybe I was naive, but I was convinced of the value of that car. That car and that salesman had turned me into a driver, and I paid him for it. Not one car salesman since has done as fine a job selling a car to me, and I've not paid any of them for their underwhelming performance.

Additionally, to this day, I have yet to find a car that'll do for me what a BMW 3er does. (As an aside, I'll say I don't even much like the feel of the other BMWs I've driven -- 5er, 7er, and 3er with automatic tranny -- although I've never driven an M5 or M6, but my accountant is, I suspect, thrilled that's so.) So I keep buying them, because I know what I'm likely going to get, but certainly not because the salesman did anything to make me feel like I should buy it. As a result, my subsequent BMW purchases have been nothing more than business transactions and in that situation, it's quite easy to focus on chipping away at the price.

Even as an experienced BMW owner, I still want to feel some excitement when I go to get a new car. Hell, buying a car, particularly a BMW, should be fun! And there really is no other "regular" car that is as much fun and confidence inspiring as a 3er. One should be totally stoked about getting one, and the only way the customer is going to perceive the value of a BMW is to drive it at/close to his/her/its limit.

I don't know a single person who gets excited about buying a BMW solely because it'll boost their image or because it's a plush, luxurious ride. That a BMW may provide those things is a bonus, but lots of cars can do that just as well as a BMW, some do some or all of those things better. A good car salesman knows this and makes sure the customer gets that thrill, and such a salesman will get paid.


Handling Sex
So the moral of the story is that if one is going to sell BMWs them one must sell what it is the car excels at. Hackneyed a phrase as it may be, accentuate the positive. Why would anyone feel compelled to buy a BMW, much less pay the salesman, if all they've done is drive it around city/suburban streets? Feeling how well the car eats up potholes and expansion joints just isn't sexy at all. In that situation, a BMW's really no different than its competitors.

Take them to a track or some mountain twisties or something and let the car seduce the customer. Put them in the top end of the appropriate line and then when they balk at the price, show them that they can still have fun with the step-down version that is within their budget. Then you'll be selling at a price acceptable to both you and the customer because they will then know they cannot get what a BMW offers at any comparable price. You will have created the magical win-win situation.

A BMW is all about the handling and the 328 handles just as well as the 335, so show them the handling. When compared against a comparable vehicle, the BMW will win this battle every time. Not many car features can be felt and experienced in every driving situation as keen handling. Aside from speed, nothing, not playing with the gee-gaws nor sitting on your leather seat, feels as sexy as the feeling of complete motive control and fluidity you get driving a BMW.

You can't always go fast, but you can, every time you are behind the wheel, appreciate and revel in how your car handles, how well you can point it just where you want it to go; how deftly you can avoid that damn pothole; how you can put the front tire within inches of the curb and know you won't hit it, even if you doing 40 or 50 mph; how easily you can slip the car into that tight parking spot; how connected you and the car are when you drive it.

You can't get better handling in any car until you pay many tens of thousands of dollars more. And there are plenty of cars costing $100K +/- $15K that don't handle as well. And true, for a bit less money, you can get a bit less handling feel, but who the hell wants less of anything when for a substantively irrelevant difference in price they can have perceptibly more of the sexiest thing you can get from a car? Let the car make them feel like a race car driver. Let that car give the guys a hard on and tickle the girls' coochie.

Now, yes, I know the dealer makes the salesman's job harder, particularly when they fill the lot with heavily optioned cars. If the dealer is focused on volume (those that have nothing but heavily optioned cars have to be for most folks in most places can really spend $50K+ on a car so you know that dealer is vying on volume and extensive discounting, not full pop sales) your strategy must be the same, but you cannot achieve that if you don't sell the car it is you have to offer. So in such a case, your sales approach is the same, it's just your money making strategy that is different. (My story below will illustrate what this means.)

My glean of your situation is that you were working in a volume dealership trying to write full pop deals, but even it I'm wrong, it's pretty clear that somewhere along the way there arose a disconnect between either you and the dealer or you and the customer. And quite frankly, if a salesman can't deliver enough 3 series (perhaps now the 1 series), which will be the majority of cars a BMW salesman sells, to make a reasonable living, the fact is that regardless of all other factors, that salesman has little if any hope of selling the other cars on a BMW lot, and he, the customer and the dealer would all be better off if that salesman works elsewhere. The salesman's dearth of sales/income may be because the salesman and the dealer have conflicting motivations and strategies, it may be because the salesman doesn't understand the product he's got to sell, it may be because the salesman doesn't understand his customers, or it may be some other reason, but the fact is the same whatever the reason, and a sage salesman will recognize the simple reality of the fact and act accordingly.

But if a salesman find a good dealer who keeps a good range of cars, he can sell up and down. A good car salesman knows full and well that just about anybody can buy a basic 328/128 and many can buy one with a small smattering of options. He makes them love that loaded 335 and if need be shows them that a rather basic 328 can be just as much fun and he'll be selling nearly a car a day and making fine money, even if it's just the flat you earn. They may have come in to buy a car, when a good salesman is done with them, all they want is a BMW.

Differentiate the product! When a customer comes in to buy an automatic, make sure they during their test drive they rock those gears. They can drive any car with the tranny in "D." The ads say "the ultimate driving machine." Show the customer what that really means. Sure some folks will still buy other cars, but if the BMW salesman does his job right, every one of those folks will know they have bought a lesser performing car. They'll know it when they try this or that little move with their car and it just barely, if at all, pulls it off. They will forever have buyer's remorse, secretly wishing they'd bought the Bimmer, and they will eventually trade up to a BMW.

In closing, I'll just say that the principles I describe above apply to just about anything. When I was working during my college summers, I sold clothing in a high end department store. I had recent college grads in the late eighties buying $400 suits because even though the material didn't feel as nice as the $800 ones, they looked as nice. In clothing, the sex is in the look and, if they can afford it, the feel of the material; very few folks get all hot and bothered over hand-crafted tailoring and details. Now, my clients will haggle down the price on basic implementation services, but they pony up for the change leadership services to accompany the implementation once I help them realize they simply don't have the in-house skills to do that stuff themselves and that that stuff is what makes their implementation and transition go smoothly, thereby getting us consultants outta there as soon as possible and keeping overall costs to a minimum. In consulting, it's maximized results with minimum risk that gives executives hard-ons. (Now if that isn't boring as all hell, I don't know what is...pity those fat cats' lovers/wives.) What's sexy is what sells, and therefore that's what the good salesman sells, and as I've already said, with BMWs, it's the handling.

[tony20009]

BTW, jferrell, what have you decided to do for a job?