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Not as if I haven't already provided you with $1000's of dollars worth of inside information at NO cost to you, but I am going even further! I am exposing the car business and all their tricks because of the overwhelming lack of integrity as it relates to car dealers and their endless greed. After nearly 20 years in the business being taken advantage of, used, and manipulated by greedy dealers, I am giving you the information that scares them to death.
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Most companies that peddle services or wares have a process in place to sell their products. Car dealerships are organizations that typically attempt to use a sales process to their distinct advantage when it comes to selling you a new vehicle. Naturally, sales processes come in all shapes and sizes, but are only as good as the trainer who teaches them and the level of talent a person possesses to implement its use.
I have taught a structured sales process to scores of sales consultants, service advisors, and managers over the years internally or as a consultant. Sales processes do work and are designed to keep an individual organized and on track to lead you (the buyer) to a successful sale. In fairness to the process, itself, the best salespeople use one, and it makes for much happier customers. However, given the predatory nature of car dealers and their sales staff, it is vital for you to know how to understand the process and how you can ultimately control it.
Let's break down the actual sales process that I have used and taught:
1) Customer Welcome
2) Customer Needs Assessment
3) Vehicle Selection
a) report to manager for guidance
b) evaluate inventory and gross profit potential
4) Feature/Benefit Presentation
5) Demonstration Drive
a) trial close
6) Trade Evaluation (if applicable)
a) history discussion
b) silent appraisal
c) devaluation
d) trial close
7) Transition To Write-up
a) credit application
b) down payment inquiry
8) Purchase Proposal Presentation
a) payment or difference
b) overcome objections
9) Close Sale
a) F&I preparation
b) business manager turn
10) Vehicle Delivery
Sales processes sometimes have a couple of more steps or possibly a couple less. Notwithstanding, as an expert in the business, this is the one that I have taught and the one that was very successful for me, personally.
As I always advise, don't try to over-analyze it or try to outsmart it. Many consumers have tried and failed miserably. However, if you pay close attention to how I dissect the (10) steps for you, there is no doubt, whatsoever, that you will have a MUCH better understanding of how you are being led and manipulated into ultimately saying 'yes' to a purchase.
So, let's get right to it and break this process down step-by-step while taking time to give its purpose and the psychology behind it:
__________
STEP (1) - A professional salesperson is comparable to a shark in many respects; it needs to feed. You are the source of food that the shark circles and preys upon. If he/she is top-notch, every question and statement will have a purpose and be very calculated. You can be certain that a pro is mentally notating every, single thing that you say to use to their advantage as they move you through the process.
Conversely, keep in mind that many salespeople are not professional at all. This is why we don't take any delight in car shopping, right? But, the good ones are very personable, well-dressed, articulate, and very accommodating. In either case, there is no question that both the smooth professional and the Dirt-Lot-Dan can readily take advantage of you and make a very handsome commission at your expense. The low-lifes also know how to play the car game as well. They just do it with less scruples with seemingly no regard for ethics or legal ramifications.
The goal of ALL salespeople is to draw you in, build rapport, gain your trust, and strike.
The goal of ALL salespeople is to draw you in, build rapport, gain your trust, and strike.
INSIDER TIP - Be polite, be aware, be guarded, and think before you speak. It will not pay to be an ass, believe me. The dealer staff will make it their mission to take as much of your money as possible. You are selling yourself, so to speak, and building rapport just like the salesperson. Intelligence and preparedness will pay off for you as well as an amiable attitude. The goal is to will not be combative.
__________
STEP (2) - As I always tell all of my trainees, the needs assessment is far and away the most important step in the process. Why? Because this is where they are going to ask some very pointed questions that will 'paint a picture' for their manager. Loaded with this essential information, they methodically choose the right vehicle to their advantage, sell out of existing inventory to their advantage, preliminarily structure a financing strategy, and maximize their profit potential.
Do keep in mind that not many managers and sales consultants are terribly sharp. They don't follow directions well, love to short-cut the process, seem to always think they know best, and simply appear untrustworthy to customers. But, they are still equipped to play the game and do damage to your wallet. Honestly, most salespeople either skip this step in the process or minimize its effectiveness by skimming through it. Furthermore, most managers didn't perform this step well as a salesman and don't often get off their ass behind the desk to ask you themselves.
What I have taught my trainees is to use a very simple needs assessment form to ask prepared questions painting me a clear picture of who you are, where you live, your demographic, vehicle needs, financial information, credit standing, former lenders, and trade status. As an expert, I can make very determinant decisions very quickly while keeping your focus forward and guiding you ahead as a means to my desired end.
INSIDER TIP - Most of these questions are actually fairly harmless. What do you currently drive? Your current payment? What payment range are you seeking? What features do you need in a new vehicle? Will you be trading a vehicle?
Answer only the basics and defer away from pay-offs, payment ranges, whether you will or will not trade, if you will be financing with the dealer, etc. Again, be polite! Don't give them any more reason to plot against you than already exists. Simply let them know that you are just trying to find the right vehicle within your budget.
They will ask what your budget is! LOL! You should already know your number. If it is $20,000, just tell them 'under $20,000' and leave it at that. The most important aspect here is that YOU know the answers to these questions for yourself.
They will ask what your budget is! LOL! You should already know your number. If it is $20,000, just tell them 'under $20,000' and leave it at that. The most important aspect here is that YOU know the answers to these questions for yourself.
A smart dealer like myself insists that his staff qualifies you thoroughly. Without that information, customers become lost and confused as well as frustrated costing me gross profit.
__________
STEP (3) - After a salesperson has compiled all of the necessary information from you during their needs assessment, they should have been required to touch the desk as is commonly stated. In my case, I tell salespeople that I want to receive their canvas and confer with them about structuring a strategy based upon the information that YOU provided. It is a direct accountability mechanism.
Most managers only want to deal with units that are in-stock, as selling it will reduce and turn inventory and alleviate floor-plan expense. It also allows the dealer to make more profit because they do not have to pay for extra transport and fuel to bring a vehicle from a competing dealer, as well as being able to make their dealer holdback from the factory.
Dealer holdback is only applicable to the sales of new cars and trucks. It is a set monetary amount notated on the official factory invoice that dealers are paid by the manufacturer.
Dealer holdback is only applicable to the sales of new cars and trucks. It is a set monetary amount notated on the official factory invoice that dealers are paid by the manufacturer.
Dealers seek to maximize profit rather than placate to your needs or desires.
INSIDER TIP - If you choose to buy something, buy what YOU want. If they have to get the vehicle from another dealer, so be it. Maybe the other dealer would be worth the drive for you. The dealer's floorplan expenses are not your concern, nor is their profit. Rebates still apply to dealer transfer vehicles. Expect to pay a bit more for a dealer transferred vehicle. This usually amounts to a few hundred dollars.
__________
STEP (4) - After choosing the vehicle, the salesperson should conduct a thorough feature presentation, otherwise known in the business as a walk-around. The proper demonstration of vehicle features should take 20-30 minutes dependent upon equipment. Sophisticated models can certainly take more time.
INSIDER TIP - This step in the process is certainly beneficial to you as a purchaser. Keep in mind, however, that because everything is done by design, the salesperson is continuing to attempt to build rapport and trust as well as building value in the product in order to justify asking you for more money. And while more features certainly increases MSRP, you can still negotiate, accordingly.
__________
STEP (5) - The demo drive as it is commonly known is again for your benefit. NEVER even remotely consider buying a vehicle without driving it - even a brand new one. All vehicles drive differently - even duplicates of the same year, equipment, and model.
INSIDER TIP - Resisting a drive also just brings pressure from the sales staff. Take a drive and make sure you even like the vehicle. If you don't like how it drives, everything else is mute. Also remember that driving gives you negotiating power.
__________
STEP (6) - The trade evaluation (if applicable) is a highly important part of the process that dealers, managers, and salespeople take very seriously because it directly impacts their profit.
You see, a vehicle with a clear title is the same as cash and otherwise known as trade equity. Sales staff seeth at the prospect of you having a free and clear title with little to no idea as to the value of your trade vehicle.
At some time during the process (usually during the demo drive) they will want to do a trade evaluation of your vehicle. This is completely proper, and I have instructed past trainees to obtain as much info about the trade as possible from you - which is also completely proper. Obviously, they are a buyer as well, so they are entitled to ask the same questions about buying your car.
You may then be asked to accompany the sales consultant to the vehicle, and he will conduct what is referred to as a silent appraisal. In this process, he will touch each and every imperfection from dings to cracked glass to scratches to light tire tread. The silent appraisal is designed to psychologically devalue the vehicle without offering any verbal communication acknowledging that they see the issues and you are fully aware and hoped that they would miss those issues.
INSIDER TIP: Keep in mind that your sales consultant has absolutely ZERO voice in determining the value of your trade vehicle. If she is a pro, you may believe otherwise. Trust me, their evaluation is for show and a manager will make a determination of the value. Again, they see this as equity/cash.
So, why is it considered cash?
As long as that vehicle is worth more than the current payoff with the existing lender or free and clear of any liens or encumbrances, they are elated and see dollar signs. What will ruin their day and yours, however, is if your payoff is higher than the actual cash value (ACV). Unfortunately, it is too often the case in today's automotive and truck sales market that negative equity usually persists on trade vehicles. This is mainly due to longer finance terms sought by consumers to lower payments, as well as the overwhelming propensity of most consumers to not remit substantial down payments which lower the overall amount financed.
Most important here is their attempt to hold back on your trade.
Pay CLOSE attention here as I will explain something that 99.9% of the purchasing public does not know about automotive sales methodology. This information is worth thousands of dollars to you if you read nothing else, whatsoever:
- Let's say you intend to trade a nice, clean Honda Civic worth $10,000, and you have a clear title in hand. A smart manager will have the salesperson attempt to convince you with their Jedi-mind-game during the negotiation that they will be allowing (trade allowance) $9000 for your trade. All the while, however, they actually value the trade on paper at $10,000.
I know, it sounds confusing, but, in essence, your trade vehicle is truly worth $10,000, but they are going to pay you $9000.
Thus, they just picked up another $1000 in gross profit just like that! The salesperson makes another $250.00 commission and the dealer adds another $1000 to the bottom line for the month at your expense.
STEP (7) - This is the step in the sales process whereby the sales manager wants to directly determine whether they have a bona fide buyer or not.
If the sales consultant did their job properly, please recall that they probably asked you: "Mr. Customer, on a scale of 1 - 5, how would you rate your credit?"
Then, they should have gone on to ask, "With whom was your last vehicle financed?"
Lastly, you were probably informed that, "Banks usually require 20% down on vehicle purchases. How much did you intend on investing in the purchase of your new vehicle?"
If you were asked this battery of questions - which were by design - the sales manager is directing his subordinate to transition you to the purchase proposal. In doing so, this is the point where the typical salesperson tries to slide a credit application in front of you and nonchalantly asks you to complete it so they can "see if you qualify..."
INSIDER TIP: Before you EVER go into a dealership, you need to know what you qualify to do as a buyer. You should have researched your credit score, down payment capability, payment threshold (if you must finance), your debt to income ratio, etc. Don't leave it to the car dealer to determine your future. If you do, chances are great that you will pay the maximum profit possible in doing so.
Ironically, most dealers and salesmen will tell you that the people who pay the most are the happiest. No need to be unpleasant at all, but if you feel a little too peachy, back up and reevaluate.
STEP (8) - The purchase proposal step is where people are under the illusion that they are the most effective.
Folks, I cannot stress enough: car dealers negotiate every, single day. You don't... Please be prepared before you ever get to that stage of the game.
In a more professional dealership, it is usually the sales manager who is actually going to be presenting you with purchase figures. Many dealers have taken this out of the hands of most salespeople because the sales consultant does not know the margin of room to negotiate, age concerns, etc. Moreover, most salespeople that I have supervised are frankly not that capable when it comes to negotiating.
Notwithstanding, if the sales manager was sharp, he/she introduced themselves to you very early in the sales process by design knowing that he/she would be swooping in as the voice of reason and authority after the salesperson set you up to be closed.
INSIDER TIP: Chances are that the sales manager or general sales manager are the dealership's better or best closers - at least they believe so. If, in fact, they are, then you need to be prepared that no matter what objection that you provide, they are going to flip that objection back on you likely in the form of a question.
In other words, if they put a proposal in front of you and ask if you are agreeable to purchase the vehicle, you will either agree or not agree, right? If you do not agree on first pencil, you will probably be faced with an "if I could, would you..." scenario.
While some people love the thrill of the negotiation, I cannot stress enough that while I have seen a few customers 'win' (which is relative) nearly everyone who truly believed that they overwhelmed you and had you begging for the sale just paid a $3500.00 front-end profit before you ever made it to the F&I office.
The answer is to be researched and prepared to make a reasonable, fair offer that satisfies both you and the dealer without all the back and worth exercise. Also try to keep in mind (as I indicated previously) that coming into a dealership half-cocked never tends to work out positively for you. The dealer does have a right and obligation to make a fair profit, and you have the right to a fair deal. It is at its essence a compromise.
STEP (9) - Well, at this point in the game, either you have said yes or negotiated a yes or just said no. For purposes of discussion, let's assume you said "yes".
Continuing to stress our 'by design' theme in the sales process, the dealer is going to move you along and begin to prepare you for a visit to the finance office. At this point, it would pay great dividends to read or revisit our prior article, http://carbusinessinsider.blogspot.com/2015/11/beware-dealership-finance-office.html. This article will provide extremely intuitive insight as to the inner workings of a dealership finance office. This office is and can be a dealership's prime profit center.
INSIDER TIP: In short, I always suggest bringing a check to the dealership from your local credit union. Doing this alleviates you from what can be a costly decision or worse, a costly series of decisions that can realistically translate into thousands of dollars spent on your part.
Although it seems to be somewhat uncommon, I have always taught and instructed finance managers that before a customer ever reaches their office that they are to conduct a casual, non-intrusive interview with you. In this way, you are less guarded, more apt to answer new questions because you have already agreed to purchase, and more susceptible to cooperate. Thus, pay more profit.
Self-arranged pre-approval for financing (if you must) is by far the best money-saving option. This should be done when you have researched which vehicle you are most likely to purchase and usually before you ever put yourself into a position of having to even negotiate a car deal. It is best to have this done as a preemptive step.
Lastly, do keep in mind that one of the functions of the F&I manager is to complete your official paperwork to include registration with the DMV, titling, purchase order, affidavits, etc. Make sure you get a copy of EVERY, SINGLE document that you sign, initial, or otherwise! Legal actions against crooked car dealers are frequent - and for good reason. Record, document, and note everything that takes place to protect yourself.
STEP (10) - the good news is if you have done all the right things, you should be taking delivery of your new vehicle. Remember that buying a new car or truck is an emotional experience. We all can agree that getting a new vehicle can be a lot of fun, and most of us have fond memories of our vehicles.
The important thing is to just make sure that having that emotional experience does not negatively skew your better judgement. Vehicle purchases are definitely considered to be big ticket items. Therefore, we should not take those big ticket items lightly.
It is also imperative to realize that automobiles and trucks are depreciating assets . Certainly, the best vehicle that you can ever own is one that has a free and clear title as well as being mechanically sound. Take it from a person who has had some rather large car payments in his life: the best vehicle that you could possibly ever on is the one that is paid for!
END
Copyright 2017, Robert Liotti, The Car Business Insider. All Rights Reserved.
__________
STEP (6) - The trade evaluation (if applicable) is a highly important part of the process that dealers, managers, and salespeople take very seriously because it directly impacts their profit.
You see, a vehicle with a clear title is the same as cash and otherwise known as trade equity. Sales staff seeth at the prospect of you having a free and clear title with little to no idea as to the value of your trade vehicle.
At some time during the process (usually during the demo drive) they will want to do a trade evaluation of your vehicle. This is completely proper, and I have instructed past trainees to obtain as much info about the trade as possible from you - which is also completely proper. Obviously, they are a buyer as well, so they are entitled to ask the same questions about buying your car.
You may then be asked to accompany the sales consultant to the vehicle, and he will conduct what is referred to as a silent appraisal. In this process, he will touch each and every imperfection from dings to cracked glass to scratches to light tire tread. The silent appraisal is designed to psychologically devalue the vehicle without offering any verbal communication acknowledging that they see the issues and you are fully aware and hoped that they would miss those issues.
INSIDER TIP: Keep in mind that your sales consultant has absolutely ZERO voice in determining the value of your trade vehicle. If she is a pro, you may believe otherwise. Trust me, their evaluation is for show and a manager will make a determination of the value. Again, they see this as equity/cash.
So, why is it considered cash?
As long as that vehicle is worth more than the current payoff with the existing lender or free and clear of any liens or encumbrances, they are elated and see dollar signs. What will ruin their day and yours, however, is if your payoff is higher than the actual cash value (ACV). Unfortunately, it is too often the case in today's automotive and truck sales market that negative equity usually persists on trade vehicles. This is mainly due to longer finance terms sought by consumers to lower payments, as well as the overwhelming propensity of most consumers to not remit substantial down payments which lower the overall amount financed.
Most important here is their attempt to hold back on your trade.
Pay CLOSE attention here as I will explain something that 99.9% of the purchasing public does not know about automotive sales methodology. This information is worth thousands of dollars to you if you read nothing else, whatsoever:
- Let's say you intend to trade a nice, clean Honda Civic worth $10,000, and you have a clear title in hand. A smart manager will have the salesperson attempt to convince you with their Jedi-mind-game during the negotiation that they will be allowing (trade allowance) $9000 for your trade. All the while, however, they actually value the trade on paper at $10,000.
I know, it sounds confusing, but, in essence, your trade vehicle is truly worth $10,000, but they are going to pay you $9000.
Thus, they just picked up another $1000 in gross profit just like that! The salesperson makes another $250.00 commission and the dealer adds another $1000 to the bottom line for the month at your expense.
STEP (7) - This is the step in the sales process whereby the sales manager wants to directly determine whether they have a bona fide buyer or not.
If the sales consultant did their job properly, please recall that they probably asked you: "Mr. Customer, on a scale of 1 - 5, how would you rate your credit?"
Then, they should have gone on to ask, "With whom was your last vehicle financed?"
Lastly, you were probably informed that, "Banks usually require 20% down on vehicle purchases. How much did you intend on investing in the purchase of your new vehicle?"
If you were asked this battery of questions - which were by design - the sales manager is directing his subordinate to transition you to the purchase proposal. In doing so, this is the point where the typical salesperson tries to slide a credit application in front of you and nonchalantly asks you to complete it so they can "see if you qualify..."
INSIDER TIP: Before you EVER go into a dealership, you need to know what you qualify to do as a buyer. You should have researched your credit score, down payment capability, payment threshold (if you must finance), your debt to income ratio, etc. Don't leave it to the car dealer to determine your future. If you do, chances are great that you will pay the maximum profit possible in doing so.
Ironically, most dealers and salesmen will tell you that the people who pay the most are the happiest. No need to be unpleasant at all, but if you feel a little too peachy, back up and reevaluate.
STEP (8) - The purchase proposal step is where people are under the illusion that they are the most effective.
Folks, I cannot stress enough: car dealers negotiate every, single day. You don't... Please be prepared before you ever get to that stage of the game.
In a more professional dealership, it is usually the sales manager who is actually going to be presenting you with purchase figures. Many dealers have taken this out of the hands of most salespeople because the sales consultant does not know the margin of room to negotiate, age concerns, etc. Moreover, most salespeople that I have supervised are frankly not that capable when it comes to negotiating.
Notwithstanding, if the sales manager was sharp, he/she introduced themselves to you very early in the sales process by design knowing that he/she would be swooping in as the voice of reason and authority after the salesperson set you up to be closed.
INSIDER TIP: Chances are that the sales manager or general sales manager are the dealership's better or best closers - at least they believe so. If, in fact, they are, then you need to be prepared that no matter what objection that you provide, they are going to flip that objection back on you likely in the form of a question.
In other words, if they put a proposal in front of you and ask if you are agreeable to purchase the vehicle, you will either agree or not agree, right? If you do not agree on first pencil, you will probably be faced with an "if I could, would you..." scenario.
While some people love the thrill of the negotiation, I cannot stress enough that while I have seen a few customers 'win' (which is relative) nearly everyone who truly believed that they overwhelmed you and had you begging for the sale just paid a $3500.00 front-end profit before you ever made it to the F&I office.
The answer is to be researched and prepared to make a reasonable, fair offer that satisfies both you and the dealer without all the back and worth exercise. Also try to keep in mind (as I indicated previously) that coming into a dealership half-cocked never tends to work out positively for you. The dealer does have a right and obligation to make a fair profit, and you have the right to a fair deal. It is at its essence a compromise.
STEP (9) - Well, at this point in the game, either you have said yes or negotiated a yes or just said no. For purposes of discussion, let's assume you said "yes".
Continuing to stress our 'by design' theme in the sales process, the dealer is going to move you along and begin to prepare you for a visit to the finance office. At this point, it would pay great dividends to read or revisit our prior article, http://carbusinessinsider.blogspot.com/2015/11/beware-dealership-finance-office.html. This article will provide extremely intuitive insight as to the inner workings of a dealership finance office. This office is and can be a dealership's prime profit center.
INSIDER TIP: In short, I always suggest bringing a check to the dealership from your local credit union. Doing this alleviates you from what can be a costly decision or worse, a costly series of decisions that can realistically translate into thousands of dollars spent on your part.
Although it seems to be somewhat uncommon, I have always taught and instructed finance managers that before a customer ever reaches their office that they are to conduct a casual, non-intrusive interview with you. In this way, you are less guarded, more apt to answer new questions because you have already agreed to purchase, and more susceptible to cooperate. Thus, pay more profit.
Self-arranged pre-approval for financing (if you must) is by far the best money-saving option. This should be done when you have researched which vehicle you are most likely to purchase and usually before you ever put yourself into a position of having to even negotiate a car deal. It is best to have this done as a preemptive step.
Lastly, do keep in mind that one of the functions of the F&I manager is to complete your official paperwork to include registration with the DMV, titling, purchase order, affidavits, etc. Make sure you get a copy of EVERY, SINGLE document that you sign, initial, or otherwise! Legal actions against crooked car dealers are frequent - and for good reason. Record, document, and note everything that takes place to protect yourself.
STEP (10) - the good news is if you have done all the right things, you should be taking delivery of your new vehicle. Remember that buying a new car or truck is an emotional experience. We all can agree that getting a new vehicle can be a lot of fun, and most of us have fond memories of our vehicles.
The important thing is to just make sure that having that emotional experience does not negatively skew your better judgement. Vehicle purchases are definitely considered to be big ticket items. Therefore, we should not take those big ticket items lightly.
It is also imperative to realize that automobiles and trucks are depreciating assets . Certainly, the best vehicle that you can ever own is one that has a free and clear title as well as being mechanically sound. Take it from a person who has had some rather large car payments in his life: the best vehicle that you could possibly ever on is the one that is paid for!
END
Copyright 2017, Robert Liotti, The Car Business Insider. All Rights Reserved.
