Consumers vs. Auto Dealers

Help Me! Help You!

I was invited to do a radio show interview this week about my company (mydealerreport.com).  The host of the show asked me a simple, but puzzling question.  What do I see as my biggest challenge?  Is it keeping the course or is it getting the word out about what we are doing?

Now, both of these things have been challenging, however neither are my most challenging.  Convincing auto consumers to research their local car dealership is the most challenging.  I know this sounds strange, but alot of consumers don't feel this is needed.  They feel confident in their ability to negotiate a great deal.  After all they have become experts by surfing every corner of the World Wide Web about purchasing a vehicle:  They have bought cars before; they always work the salesperson into giving them a great deal; the salesperson sold their neighbor a car or the salesperson goes to the same church.  These are all the things some of the auto consumers feed themselves.

I am glad to say that we have been helping an overwhelming amount of consumers everyday.  However, one consumer lost is too many.  What a majority of the above auto consumers don't realize is car salespeople are trained soldiers. They receive training every day of the week.  They are taught how to react to any and every objection created.  Salespeople go to seminars, watch videos, study books and role play.  They share war stories to help increase their knowledge of actual combat.  These lot soldiers are taught how to interpret the way a consumer talks, walks and reacts.  In many cases they are taught to make a consumer react a certain ways (mad, frustrated and worried). 

I am not saying that auto consumers are not smart.  But what I am saying is auto consumers don't train year round to buy a vehicle.  How many of us truly believe we can swim faster than Olympian Gary Hall?  Not many! He trains year round to be the fastest swimmer.  That doesn't make us dumb or less talented, just less experienced.

Carfax is a perfect example of how my company is presently positioned. Five (5) years ago most auto consumers didn't feel the need to receive a report on the history of a vehicle.  However, most consumers were aware that vehicles with body damage existed, but thought they could out wit the dealer.  Now in 2005 auto consumers will not buy a used vehicle without running a Carfax report.  Carfax had to educate many used auto consumers about the dangers of buying a vehicle without knowing the history.  My company finds itself in the some position today.  We are now on the mission of educating consumers on the need to know their local dealer's history before purchasing from them. That is why we adopted the slogan “Who do you trust? Know, Before you go!”

Check out the website that trying to help auto consumers: www.mydealerreport.com

A Never Changing Business

I recently went by a dealership I worked for in the past to visit the guys.  It was truly a sad sight.  The same guys were doing the same things when I left over two years ago.  They have not evolved.  The auto industry makes you think they are adapting to the wave of educated consumers, but it isn't true.  What they are doing is trying to find a new way to trick the educated consumers.  The dealers have created a new consumer interface with the same internal workings.  There are a few dealers who believe in taking care of the consumers, however they are far and few between.

As I stood there watching my old co-workers performing the same old trick with a contemporary twist, I couldn’t help but be amazed.  According to all the media outlets, car purchasing is becoming easier and better for the consumer, whatever!  Do you know that auto purchasing in the number 1 complaint among consumers in the United States. 

I don't care how much technology and research is included in the car buying process, dealers will continue to be who they truly are, hustlers.  When we as consumers start holding dealers accountable for their actions then we will see a change.  As consumers we need to reward the good dealers with our business and punish the bad dealers by taking our business away.  Remember you don't have a right to complain if you are not helping to prevent the problem.

What the Hail!

Last week the city of Atlanta, Georgia experienced a slight hail storm.  The hail was the size of cake crumbs, but according to a few cardealerships they were the size of grapefruit.  These dealerships are claiming that 90% of their inventory was damaged and they haven't seen anything like this in 10 years.  What the Hail are they talking about?

"We are going to have a hail damage sale to recover some of our lost", one of the dealerships said.  I feel these dealership think people are stupid.  All the people who live in the Atlanta area know that the hail storm was not bad.  I didn't experience any damage to my vehicle, nor did any of my friends and family.  This goes to show you that some dealers will use any situation to sell a vehicle, and they wander why people don't trust them.

All dealers are not created equal;however this industry needs a major overhaul on ethics and morals.  I worked for dealers that would try to sell a widow a car at her husband's funeral.  I say all this to say "What the Hail!".

Be Car Smart!

People often get caught up in many aspects of car buying. For instance, how to receive financing, options they want on the car, the type of car, how much they want to spend and the list goes on.  A few main aspects that are sometimes lost in the shuffle are the two R’s of car buying, reliability and resale/trade in value. People are sold on a car that has less trade in value. There are several places you can find out about reliability and resale values. The internet offers sites. You can also rely on Consumer Report Magazine. Some of the car brands that offer the best reliability and resale value are the Japanese imports, to name a few; Nissan,

Toyota

, Honda, Lexus and Acura.

Keep this in mind when shopping for a car.

When trading in your car at a dealership, don’t be afraid to put up a fight for what you feel your car is worth.  Worst case scenario you can always sell it yourself and get more than what the dealership will give you. Dealerships today are offering higher trade in values to complete most sales. Reliability and resale value are very important don’t let these simple concepts slip through when purchasing your next car.

Why I Want to Help Car Shoppers?

Yesterday I started to think why I started this weblog and my company Mydealerreport.com.  Was it for the money?  Was it because I need forgiven for my car salesmen days? Well I am not producing millions for my services.  Neither am I forgiven by helping auto consumers, because only God can do that.  I think my true desire is to help the disadvantaged.  Now most people do not want to see themselves as disadvantage, however when the opposing forces have an advantage over you this is a call a disadvantage.

Many car shoppers think by cramping for a car sale they can beat the dealer.  You must remember the dealer studies and performs the act of selling 365 days of the year.  They live to sell the consumer a car.  This is their life's mission.  Think about it, could you beat Tiger Wood at golf by taking lessons for a month?  No!

So, can car shoppers ever gain an edge over the dealer?  Yes!  First, they must understand who they are dealing with.  This is the primary reason my team and I started our company to inform car shoppers about the background and practices of any dealer.  A dealer's reputation is the first sign of who you are dealing with.  I believe a person should never do business with anybody without knowing their business practices first.  When I was selling cars, I always had customers telling me that they understand how we work, because they buy cars all the time or their friend sold cars before.  Unless you have been in the trenches of a dealership you will never truly understand the mind of a car salesperson.  You must discover how they treat their customers before and after the sale.  Discover how their customers were treated throughout the complete buying process (salesperson, finance person, trade in process).  The key to creating more advantage for yourself is finding the dealership with the most respect for their customers.  It okay to read about the vehicle, the financing and even the tricks the dealer tries to use.  Why research and prepare to deal with a crook, when you can deal with someone honest? Visit www.mydealerreport.com

Certified Car, Yeah Right!

When an auto dealership states the car has been certified does that mean the car is perfect?

Always check the car.  If you don’t know how, learn how. Often when an auto dealership states a car has been certified, the dealership is saying it has gone through a rigorous inspection. Depending on the work ethic and honesty of the dealership, the word “Certified” can have many definitions. It can mean a 10 to 100 point inspection of the car or it can mean just wash it and put it out on display.  Either way they will charge an obscene amount for the title of “Certified”.  It usually ends up being pure profit for the dealership for very little work.

Depending on your credit situation the dealership may have to put you in a car or you will be able to pick the car you want.  In either situation inspect the car. You can have your own personal mechanic check the car for you. Many independent mechanics will offer a pre-sale inspection for about $100. I would definitely suggest being able to spot things on your own.

At first, walk around the car and see if the outside appearance is good enough to continue.  Also, take a glance inside and look at the interior.  If the vehicle seems to have damages walk away and move on to the next car you want to check out. Check the paint for scratches and dents. Look at the tires and feel them to make sure they are wearing evenly. Check the bumpers, hood, trunk, doors, and fenders to make sure they are aligned properly and fit evenly on the car. Look under the car for rust and leaks. Open the hood and trunk to see if there is a spare tire and equipment to change the tire. Make sure there is no water in the trunk.  Look at the engine and see if it’s fairly clean. Look at all of the fluids. You should unscrew the oil cap and smell it to see if there is a burnt smell. When checking the oil and transmission fluids make sure they don’t look dark and dirty. Once you have checked the outside, look at the interior as well; does the car smell bad when you sit in it; look for stains or broken items; look under the dash for hanging wires. Then start the car and listen for any unusual noses.  Make sure the car starts quickly and there is no hesitation or bad smells coming from the engine. Check the operation of the windows, sunroof, wipers, air condition, heat, movement of the seats, radio, and, compact disc player. Take the car on a test drive. Brake hard and listen for noises going forward and in reverse. At 360 degree angles turn the car left and right to listen for any noises.

No used car is ever perfect so try to protect your self in every way possible. Anything you find wrong with the car may help you to negotiate a better deal.

The Mind Of A Salesperson

When I was selling cars I kept a stat journal. In this journal I would write down how many walk-ups (customers that walk onto the car lot), references, phone-ups (customers that called into the dealership), be-backs (customer that I have worked with, but did not sell) and repeat customers I talked to every day.  The more contacts I had the greater chance I had at closing a sale.  Most people understand this concept; it's referred to as the numbers game.  Customers were not just a typical number for me, 1,2,3,4, instead they were $500, $1000, $1500.  I saw all customers as money and that is how the dealerships trained us.  What most people don't know is the longer I talked to a customer and the closer the customer came to my desk, the chance of me closing the sale increased dramatically.  If I got a customer in the dealership I would have a 75% chance of closing the sale.  If I got the customer to sit down at my desk I would have a 95% chance of closing the sale.  A typical salesperson numbers are not this high.  I was the number two salesperson out of eighty salespeople.  Customers were merely numbers to me, resulting in a steak and lobster dinner.  I focused on repeat customers, referrals and be-backs the most. The numbers told me that I had a 99% of closing a repeat customer, because they already trusted me.  I had an 80% chance of closing a referral, because they trusted the person who referred them.  I had a 33% chance of closing a be-back, because I have already built trust with them. 

Dealer Finance is Broken

One of the largest auto industry organizations has addressed the negative press that auto dealership have been receiving because of their finance practices. Their solution to this problem is educating the consumers about how dealership finance works. The Chairman of this organization released the following statement, “We must help increase public understanding of dealer financing.  The real story here is that most consumers do not know that the interest rate may be negotiable or that the dealer may be compensated for obtaining financing. This has created the misimpression that we have something to hide and also underscores the need for greater transparency in dealer financing. With this in mind, our board of directors voted unanimously to support disclosing to car buyers that the finance rate may be negotiable, and that the dealership may receive a portion of the finance charge for helping the buyer secure a loan.”

However, this organization is not asking the dealers to disclose the buy rate. The buy rate is the wholesale interest rate from the bank. Furthermore, the dealership has onsite financing, not only to benefit you, but them as well. If the auto industry wants to truly come clean they need to be totally honest. Most dealerships take pride in charging consumers higher interest rates and marking up finance products (warranties, Gap insurance, Etch and etc.). Finance managers are not paid salaries; they are paid commissions on the markup of all finance products including interest rate. Back to the buy rate, if they truly want to help consumers attain financing then set an industry standard for markup example disclose the buy rate and mark it up one (1) interest point. After all dealerships are just helping the buyers secure a loan, right. This organization needs to stop sounding like car salesmen and really correct the problem in the industry. The following statement from the Chairman shock me,  “We are not hiding under the desk. Still, some critics demand that dealers disclose the dollar amount or the percentage markup. This would be misguided and counterproductive.” I thought honesty was the best policy. I get it auto consumers are not smart enough to understand dealership need to make a profit. I believe if an industry standard markup is set consumers would be more at ease. The reason why dealerships can not disclose cost factors in the present structure is because consumers do not believe what they say. Consumers believe everything a dealer say is a setup. When I was selling cars I tried to be honest, but consumers still did not believe me. Until the automobile industry decides to give full disclosure and standard markups as a united front, consumers will remain distrustful and unsatisfied. There is only one way to solve this problem, full disclosure.