[AMA] I Am a Car Salesman, Ask Me Anything!

To celebrate my 22,000th comment which will happen on this post, I figured it's about time I do something like this, especially after trying to dispel the hybrid myths on this post

Currently working Toyota new cars, have worked for Holden & Suzuki previously, as well as used car sales.

Former top 10 deal poster, current top 10 commenter and competition poster (Stats here)

Aaaaand go!

(FWIW I won't neg vote anyone on here, I know the discussion can get passionate at times but that does nothing to further the conversation. I use my words not my neg votes!)

closed Comments

  • +2 votes

    Any bargains for us?

  • +4 votes

    Are you a second hand car salesman?

    • +5 votes

      Currently new cars

      • -4 votes

        But you remember your
        earlier days in "Refurbished" …yes?

        Assuming as much, I'll ask
        (anyone can answer, & you
        might even pass my Q to 1
        of your colleagues int "Used")

        Today, I've got 2 older SAAB's:

        (One's a nice 4-door sedan,
        3 open, since it was vandalised
        in Outback SA; the other's
        a wagon, imported from UK)

        I've begun to spend a lot of time
        in Regional AU, where SAAB parts
        are scarce.

        1. What's the best way to sell
          one or both, & pivot to a smaller
          import, eg: Hyundai or Toyota?

        I'm soon to stay in a small town
        & short trips will be the norm.

        Occasional trips to the capital
        &/or our nearest ALDI also need
        to be accommodated.

        Fuel-economy is a must, as is
        reliability & low life-cycle
        running costs

        Suggestions? Makes & Models?

        1. Would SAAB clubs be the way
          to get a better price for the
          SAABs… or who?

        Thanks :~)

  • +30 votes

    When do you know if a Car Salesman's (Salesperson?) is lying?

    When you can see their lips moving.

    • +7 votes

      When do you know a customer is lying?

      When they walk in

      Also applies to retail… hospitality…!

      • +10 votes

        haha. My brother in laws was also a car salesman. A pretty good one too in fact.

        He said the same thing, as soon as customer walked in the dealership and opened their mouth, he could tell if the person was going to buy the car or not. :P Anything else is just lies.

        • +6 votes

          Shush lawyer :P

          Lol but yes, we get lied to far more than we lie.

          And customers lie to retail workers and hospitality workers, anyone who negged that reference obviously hasn't worked those roles ;)

          • +5 votes

            @Spackbace: Customers lie to everyone. "Oh no I haven't spoken to anyone else about this solution" or "No we'd never take your work and shop it elsewhere"
            I'm in corporate IT and customers don't seem to understand that all vendors have deal registration systems so we know via that whether they (1) have spoken to anyone else previously and want a third quote or (2) are trying to shop our configs

            • +6 votes

              @jnewau:

              I'm in corporate IT and customers don't seem to understand that all vendors have deal registration systems so we know via that whether they (1) have spoken to anyone else previously and want a third quote or (2) are trying to shop our configs

              Some fools call this "the free market".

              I call it a situation where someone has something to sell and they set about attempting to rig the system in their own favour. Competition does not drive down prices, people selling just rig the market in their own favour.

      • +13 votes

        That shows your sentiment towards customers. Thanks for prove me right.

        • +14 votes

          Must be how car salesman and dealers ease their guilt for taking advantage of people, "Oh they are all liars anyway."

        • +18 votes

          It was a joke, far out lol if you treat me fairly and with respect, I'll do the same in return. Lie to me about what some guy down the road offered, etc etc, I'll point you back in the direction of the guy down the road!

          Lie to me about what change I gave you when you bought your meal, I'll dispute it.

          If you want to generalise my interactions with my customers, based on a 1-liner on an internet forum, go for it. More fool you.

          • +13 votes

            @Spackbace: Exactly my sentiments when buying cars. You want to lie to me about how you’re losing money on the car or how you’re trying so hard to help me out as the prices are going up tomorrow, 150million others looking at the same car, etc., I just goto the guy down the road…..

            • +5 votes

              @amaris-aiya: Funny thing is, we have no control over sale prices. If the sale ends that day (they generally run for about 2 months), and the next day it goes up, we can't magically honour the price from the day before.

              And yes, it happens, Hilux just went from $52,990 to $56,990. Kluger went from $42,990 to $48,888. Overnight.

              If it's just from today for example, to tomorrow, then the price isn't changing!

              (Didnt neg you)

        • -38 votes

          Ah, so you've never had a real job then? Sad. It should be mandatory to work a retail/hospitality job for at least a year so people like you can get a taste of the reality you're so out of touch with.

          • +22 votes

            @Adonael:

            Ah, so you've never had a real job then? Sad.

            What the…? What's your definition of a real job?

            I'd say that anything you do that puts money on the table is a real job.

          • +4 votes

            @Adonael: I worked retail for 5+ years when I first started working. I had a good boss so it was the best learning environment ever.

            I've encouraged both my kids to get some form of job that involves dealing directly with the public and providing paid for goods or services. They both do casual waitstaff jobs and it's been a good learning experience for them.

            •  

              @brad1-8tsi: agreed..I feel like everyone should at least experience a sales job once in their life..it teaches so much about interactions with people, which turns out to be extremely helpful in dealing with your future clients/business partners.

          •  

            @Adonael: wow shame on you for saying that…..you are probably out of workforce or never had a job yourself…keyboard warrior is not considered as a job btw..

      • +1 vote

        There is a term in the industry, "buyers are liars" but it is the case with all retail.

  • +1 vote

    What would a realistic average percentage discount one could expect from a new car purchase in your opinion?

    • +6 votes

      All depends if it's off RRP, or sale price.

      10% off RRP is about the right mark, but there's way too many variables. Holden used to advertise the VE Commodore at $10-$15k over what they could do it for, or what they would put it on sale for. These sort of outliers make it difficult to make a blanket statement

  • +4 votes

    How much profit do dealerships typically make off new car 'extras' that are sold to unsuspecting customers at inflated prices (ie. tinting, paint protection, mats etc). I find it amazing they have the gall to quote up to $700 for tinting a small sedan, when you can easily have this done for $250 after purchase. Also, does metallic paint really add $750 to the price of a new car over white paint? Any insight would be awesome. And by the way, keep up the great work :)

    •  

      Related to this, would you recommend getting tinting done at purchase time or after by a 3rd party? If the latter, where?

      • +4 votes

        Depends on your negotiation skills etc. You can normally get it to within prices from other places, and we do have a good proper record of your warranty.

        I'd trust a dealership to stay in business longer than a tint place, for warranty fixes down the track. We have fixed tint later on, just ripped it off and re-applied it.

        I could go on about the application process, if the fluid they spray before putting the window tint on drips down into the door electrics, you're in a world of trouble, but I'll just stick to what's easier to discuss :)

        • +1 vote

          Some very valid points re tinting through the dealership that hadn't cross my mind. Thank you.

        • +2 votes

          Car dealers get nearby 3rd party to do the tints anyway.

        • -6 votes

          Fluid? you mean lightly soapy water? Get outta here! you just proved you guys are full of it.

          • +5 votes

            @dwillia: I thought it was just soap, but as I haven't personally installed tint, I wasn't going to guess and be wrong.

            Last I checked water is a fluid yes? At least that's what I was taught in physics. So how am I full of it exactly? Or don't you know your fluids from your solids?

            • +1 vote

              @Spackbace: you missed my point, being that a bit of water running past the seal on the door will affect "the door electrics, you're in a world of trouble, but I'll just stick to what's easier to discuss :)" you're dreaming

              as I said, full of shit

            •  

              @Spackbace: Full of shits. That was taught in Chemistry not Physics.

      • +13 votes

        As someone close to the tint business, you'll almost always get a better deal going directly to the tint shop. Most smaller dealers literally just take it to their local tint shop anyway, and ask for the cheapest tint, that they just sold you for $700.

        As far as water dripping down into the electrics, it's just another scare tactic, I've never heard of that happening… Not to mention over driven cars plenty of time with rain coming in the window etc gotten water all over the switches and never had a drama, I'm sure they are all designed with some level of water resistanance.

    • -5 votes

      That's something I'll choose not to comment on tbh. Aftercare gross and finance gross are something that pays our bills, and I'd be doing myself and my colleagues a disservice by talking about it :)

      Also, does metallic paint really add $750 to the price of a new car over white paint?

      Yep, metallic is generally cost price, or within a small margin. Ours is anywhere from $450-$550, Suzuki would charge $1250 for the 2-tone Vitaras! And the Euro brands charge up to $10,000-$15,000 for colour choice.

      • +1 vote

        Aftercare gross and finance gross are something that pays our bills

        Thanks for the reply SB. I can only assume servicing would make up a fair portion of paying the bills as well? And wow on the cost of paint for Euro brands!

        • +4 votes

          Can do, yeah. The whole dealership model is so interlaced. When sales quote a cost to a customer to have a part fitted, there's profit margin from parts, profit margin from PD to fit it, then any profit we want on top. Each department chasing profit, even internally.

          • +1 vote

            @Spackbace: Which is kind of scary to think about and as much as I value brand dealers over dodgy salesman it seems to be a faltering industry where proift margins will need to just keep getting higher as there are losses in other areas. The amount of people who just don't want to think and trade in and upgrade (as they call it) is surely dwindling. You can find all the stats online get better return from your depreciating asset private and it's extremely costly to upgrade and constantly be under finance or taking hits financially with every car purchase. It's a necessary evil but you can limit your losses so easily with a small amount of thought.

      • +53 votes

        That's something I'll choose not to comment on tbh.

        So, kind of an "ask me almost anything" then.

      •  

        What brand charges 15,000/- for metallic paint?

    • +7 votes

      Short answer:

      ~30% total, shared across multiple departments, excluding dealership load/overheads

      Long answer with examples:

      Like any retail interaction, it depends on the franchisee's business model, the product and the supplier.

      Yes, some products/materials can be marked up 200% over the purchase price, however at 100% mark up:
      * GST would take 20% of that mark up. Other taxes and duties take more.
      * Many items have minimum order amounts that will never be sold or sold at loss years later.
      * To be able to mark up most 'genuine' parts 100% to customers you need to be that regions distribution centre, which requires millions of dollars of stock to be held per vehicle supported, at a cost to the dealership.
      * Many brands require hourly labour rates to fit parts that are more suited to small, TAFE trained workshops. Dealerships are forced to stock expensive specialty tools in their franchise agreement and most of their mechanics will do two weeks or more of further, manufacturer specific training.

      A normal breakdown of a genuine accessory is:
      * 20% mark up to parts
      * A fixed amount to service to install it
      * The cost of the part delivered from the distribution centre
      * Taxes

      Aftermarket mark up known by sales people (if they think they are good) excludes labour, taxes and other components a sales person may not think about. If tint costs you $250 down the road, it may cost a dealer $275 at the same place as they get an invoice. Hold 20% ($55) for warranty issues. Hold another 20% ($55) so the dealer can afford to give free tint every occasionally to close a deal. At $650 retail $76 might go in taxes (cost so far $461). That would give a 29% margin before overheads (rent, power, wages, fit out, etc.), which is horrible in retail (you generally need 30% after overheads). So that 160% mark up would actually be closer to a 40% mark up once some of the costs are accounted for.

      Paint protection material mark ups look equally as bad until you start considering the labour and even occasional paint touch ups prior to application to support the paint protection warranty. Dealers who self warrant need to keep a very large % for warranty claims as respraying a car after production can cost $10's of thousands of dollars (even with manufacturer volume discounts). And I am ignoring some of the more expensive products that either perform significantly better or come with bullet proof manufacturer warranties which are often sold for the same price as a basic system (some dealerships really care about their customers!).

      Unlike Spaceback I am comfortable sharing this info as it is exactly the same for any retail sales experience, except with significantly worse performance.

      • +1 vote

        Good answer but GST wouldn't take up 20% of the mark up. It will only ever be 1/11th. For example:

        Tint sold to the customer for $110

        Tint is bought from the supplier for $55.

        The dealer remits $10 to the tax office, but gets an Input Tax Credit (ITC) of $5 for the tint they bought from the supplier.

        GST Liability = $10-$5 = $5.

        Margin = $110-$55 = $55.

        $5/$55 = 9.09% (or 1/11th)

        •  

          Thank you. I did not know that. As you can tell I am obviously not an accountant!

          A dealer is never going to expose anything that takes away from their margin.

          $55 sounds close to the average cost of a cars worth of cheap tint delivered before labour. From my understanding, most dealers just hire a tinting company to come in and fit tint for them. It's not cost effective to bring in house as detailers come and go making training cost prohibitive and the quality of work done by them is often too low on such a flaw visible surface (there are many great detailers, just not normally in a dealership).

  • +4 votes

    When will we get the Supra and how much?

    •  

      Late this year, and your guess is as good as mine lol

      Taking into account currency conversion, and LCT etc, predict around $80k I reckon, but that's just a personal guestimate, we don't know.

  • +9 votes

    What are the common upsells and BS you sell, and make money off, but we don't need?

  •  

    Looking for a GT86, what is the average discount price i can get a GTS manual for?

  •  

    overall profit per sale, I read somewhere that companies like Ford make more money on financing rather than the car itself, so curios if thats true?

    Used trade in X%
    Car X%
    Extras X%
    financing X%
    = 100%

    1. average % mark up on used cars?

    2. Is manager's car a real thing when it comes to ex demo. I really dont see the point them racking up kays on a new car to make it a ex demo car. Depreciating curve there is really steep.

    3. What car do you choose to drive and what would you like (under $100K)?

    • +1 vote

      average % mark up on used cars?

      There is no average. Some used car dealers are switching to fixed price sales, meaning they're just making a set amount per car, to be competitive on carsales.

      Is manager's car a real thing when it comes to ex demo.

      Yes it is, all managers and salespeople drive demo's. GM's and DP's in particular will have the most expensive of the brand. There's ways of claiming the depreciation, or getting demo bonuses to allow the car to sell at profit still.

      What car do you choose to drive and what would you like (under $100K)?

      Currently, Camry Ascent Sport 2.5L. Wish we had a V6 demo, but eh. Ideal, maybe a HSV VF Wagon. Have 2 kids so love the VF wagons, HSV to get the added power ;)

      •  

        Thanks for that, so when it comes to a sale, is financing where they make the most money?

        I saw a HSV VF Wagon in black with the optional Walkinshaw Performance W557 pack dropping off kids to school. Coolest and funniest thing I saw, it was an awesome car. Love to have one too.

        • +1 vote

          Thanks for that, so when it comes to a sale, is financing where they make the most money?

          They're all about even, as per how our KPIs are set, between vehicle gross, aftercare gross and finance gross.

    • +7 votes

      "Is manager's car a real thing when it comes to ex demo" LOL i am an ex Holden storeman all of my ex lease vehicles i have seen for sale(in my case changeover was every 7-9 months) have been sold as "executive driven" "ex GMH management" "mangers own vehicle" etc There used to be more x holden manager vehicles for sale in Australia then Holden had employees.

      •  

        Bahhhaa thanks for that. Thought so. Id go to several dealerships and they had several "managers cars" at a given dealership. There is only 1 manager for the dealerships, thought it odd.

      •  

        I've always thought the manager would flog the crap out of it then try and get rid off it after the damage was done lol

      • +5 votes

        Totally, and every brand has those. Difference is you'll find them on the used car lot, and the books will have a first owner (GHM, Toyota etc).

        New demo's however will have full warranty, and you'll be the first owner in the book.

        That's the best distinction between the 2

    • +1 vote

      Overall profit per sale, I read somewhere that companies like Ford make more money on financing rather than the car itself, so curios if that's true?

      Ford always makes money on the car. The finance company always makes money on finance. The dealership's finances depends on it's strengths, market and business model.

      The modern car sales process tip toes on glass about using fiance margins to get non-deals over the line into profitability. This is to push the dealerhsip's monthly sales higher at the expense of the manufacturer's brand's value. If you ignore loads, finance 'makes more money'. But the car carries the loads which pay the bills, not finance.

      Old school dealerships require all cars to make money, with finance being a bonus.

      As for profits, there are two general truths for mainstream dealerships:

      You need $3k+ in every good trade for used cars to make money.

      You need $1k+ in each car sold to keep your doors open. That $1,000 can be made up of any combination of trade, car, extras and finance.

      • 1) average % mark up on used cars?

      Min $3k, trying to average $1k per car on re-sale after expenses. Stronger sales teams with good stock will aim higher. Weaker teams with poor stock will aim lower and/or bleed money.

      • 2) Is manager's car a real thing when it comes to ex demo.

      Yes. Some managers burn though demos because they live far from work. A three franchise dealership could have six managers or fifteen, depending on their internal structure.

      Executive cars are used cars.

      • 3) What car do you choose to drive

      Not a sales person. See Spaceback. But my car and take a cash car allowance.

  •  

    I have heard that car dealership can sell a car at their cost price or minimum profit in order hit the sale target for a reward from the head quarter. It this true?

    Is there is a time/date visiting a dealship for biggest bargaining power? end of month before the dealship close.

    Thanks in advance for answering my question.

    • +18 votes

      Bonuses vary, there are yearly ones.

      Biggest bargaining power is to just be ready to buy. Don't be flaky. We get paid when a car gets delivered, so quick delivery will see a better deal. Grab what we have on the lot, or the previous year's model, or an ageing demo, and we'll drop our pants.

      •  

        But it is true that dealership will or ever sell car at cost price?

        • +6 votes

          Yep, but there's different versions of cost price. Will we do deals that have $0 profit, yep! Salesperson sees a minimum commission, most of the time around $100, for doing that deal.

        • +18 votes

          Spacebace isn't being very forthcoming in this "AMA", or he/she just doesn't know the business as well as they think they do.

          It's incredibly common for dealerships to sell cars at below their cost price. Manufacturer's entire business model with dealerships is to force them to sell cars at almost no profit, and to give them financial incentives for doing things the way manufacturers want.
          i.e It's how they manage dealers, who aren't franchises (so contractually obligated to do things in certain ways) but are always completely independent businesses.

          So sometimes it can still be hugely profitable for dealers to sell a car "below cost", because once you factor in bonuses etc, "Cost" is a very fluid number. The simplest example of this is "We're having a bad month nationally, if make your sales number this month and we'll give you a $100k bonus" - Suddenly selling 10 cars at $2k below cost can become very profitable.
          It gets more complicated when you add in examples like "Integrate this process/tool into your sales process for 80%+ of cars and we'll give you $XX bonus" or "Hit your workshop staff and bay utilisation target and get $XX bonus"

          It's a fascinating industry, I wish OP was more open.

          •  

            @sovereign01: Wow, now i have opened my eye even more. I will sure tell the sale person that making no profit on car sale is kind of a BS.

            I am prepare to make if they make offer cheaper than the cost price.

            @sovereign01 when do you think it is the best time to buy?

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