## Sunday, August 13, 2006

I stole this link from Daniel at Lobo Walk.
He and I are pretty much in agreement that buying a car is about the only time a staight guy goes somewhere and just begs to be bent over the table and taken without lube by the entire sales force.

Edmunds.com, the online car experts sent a spy into the car lots and he reports that yes, they start padding your bill as soon as you turn into the lot.

He lets you in on some of their tricks...
The next step in my training involved the use of the "4-square work sheet." Michael told me the 4-square was my friend, it was the salesman's tool for getting "maximum gross profit." As the name implies, the sheet is divided into four sections. When you have a prospect "in the box" (in the sales cubicle) you pull out a 4-square and go to work.

The information about the customer is written along the top together with the make, model and serial number of the car they want to buy. Then the salesman writes the sticker price of the car in large numbers in the upper right square on the worksheet. Michael stressed that the price of the car should be written in large clear numbers to give it a feeling of authority. He added that we should always write "+ fees" next to the price of the car (This includes license fees and sales tax.).

"Good penmanship is essential," he said. "This makes it harder for them to negotiate. "You're saying, 'Mr. Customer, if you want our beautiful new car, this is the price you're going to have to pay.'"

The other boxes on the 4-square are for the price of the trade-in, the amount of the customer's down payment, and the amount of the customer's monthly payment.

"When you negotiate, this sheet should be covered with numbers," Michael said. "It should be like a battleground. And I don't want to see the price dropping five hundred dollars at a pop. Come down slowly, slowly. Here I'll show you how."
~snip~

Michael said you could use the "up to" trick with the down payment too. "If Mr. Customer says he wants to put down \$2000, you say, "Up to?" And he'll probably bump himself up to \$2500." Michael then wrote \$2,500 in the down payment box of the 4-square worksheet.

I later found out this little phrase "Up to?" was a joke around the dealership. When salesmen or women passed each other in the hallways, they would say, "Up to?" and break out laughing.

The final box on the 4-square was for the trade-in. This was where the most profit could be made. Buyers are so eager to get out of their old car and into a new one, they overlook the true value of the trade-in. The dealership is well aware of this weakness and exploits it.

~snip~
The first numbers that go on the 4-square come from the customer. The down payment and the monthly payment are only what they would like to pay. Now, it's time to get the numbers that the dealership would like the customer to pay. These numbers are called the "first pencil" and they come from a sales manager in the tower. Michael said that the first pencil was the dealership's starting position. "You have to hit them high," Michael explained. "You have to break them inside — make them understand that if they want our beautiful new car, they're going to have to pay for it."

Here's how we were supposed to get the first pencil from the tower. After the customer test-drove the car we brought them into a sales office and offered them coffee or a Coke to relax them. Then we filled in the information about the car on the 4-square. We then picked up the phone and called the tower. Michael held his hand like a phone receiver with his thumb and little finger sticking out. "You say, 'Yes sir. I have the Jones family here with me and they have just driven a beautiful new whatever model, stock number blah blah blah.' Then you say, 'Is it still available?' Of course you know it is. But you want to create a sense of urgency. So you pause, then say to the customer, 'Great news! The car's still available!' Then the tower will give you the first pencil. Write it in each of the boxes."

I later found out that the first pencil is arrived at by the dealership in a very unscientific way. For every \$10,000 that is financed, the down payment they try to get is \$3,000 and the monthly payment they try for is \$250. In this way, a \$20,000 family sedan would require about \$6,000 down and a \$500 a month payment. (These payments are based on very high interest rates calculated on five-year loans. These numbers are so inflated that a manager I later worked with laughingly called them, "stupid high numbers.")

"But here's the beauty of this system," Michael said, "these numbers aren't coming from you — you're still the good guy. They're coming from someone on the other end of the phone. The enemy."

~snip~
At times Michael became very excited as he thought of new things to teach me. At one point he said, "Oh! This is a good one! This is how you steal the trade-in." He looked around quickly to make sure no one overheard him. "When you're getting the numbers from the desk, they'll ask if the customer has a trade-in. Say it's a '95 Ford Taurus. And say you took it to the used car manager and he evaluated it and said he would pay four grand for it. If you can get the trade for only three, that's a grand extra in profit.

"So what you do is this," Michael pretended to pick up the phone again, "you ask the desk, 'What did we get for the last three Tauruses at auction?' Then they'll give you some figures — they'll say, \$1,923, \$2,197 and \$1,309. You don't have to say anything to the customer. But he sees you writing this down! And he's going, 'Holy crap! I thought my trade was worth \$6,000.' Now it's easy to get it for \$3,000. That's a grand extra in profit. And it's front-end money too!" (I later learned that front-end money was what our commissions were based on. Back-end money was made on interest, holdbacks and other elements of the deal.)

That's why I HATE buying a car. Just fighting not to get f*cked too badly.

Well, at least now there's the internet...

...AND if you want to brave the lions den, our intreped author also includes some self defense tips so that you'll at lest get some lube.