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Hagerty
Hagerty Employee

Avoidable Contact #146: The real deal on dealerships in 2022

I feel sorry for anyone who never made a living, however uneasy that living might have been, by selling cars. The automobile dealership, particularly the independently owned auto dealership, was for many years one of the last authentically American places on Earth.
https://www.hagerty.com/media/opinion/avoidable-contact/avoidable-contact-146-the-real-deal-on-deale...
65 REPLIES 65
OCULUSNY
Detailer

Several years ago, in the process of purchasing a 2-year old, brand-new Porsche Panamera S e-hybrid from a dealer 200 miles away, i stumbled across the nicest sales trick I had ever heard of.  I had a 3-year old BMW i3 to trade (read: throw away) that they would only give me $14k for.  Through Craigslist, I found a buyer local-to-THERE who was willing to pay me $18k.  I went back to the Porsche dealer and not only got approval for this distant (to me) deal, but he offered to consumate a "courtesy trade".

Being the grandson/son of a 1928 Chrysler Coproation charter dealer, I thought i had seen most tricks, but this one seemed too good to be true.

I and my buyer show up at the Porsche shop. We both tender checks made out to the dealer for our separate negotiated prices.  Dealer writes it all up on a sales contract deducting the full $18k from my negotiated price (and home state sales tax due), and gives my buyer the house treatment of registration, sales taxes etc. and we all drive away happy....me especially on the sales tax savings (almost equal to half my Federal rebate).

I still don't know how that $4k difference rode through his books, but it's all water over the dam now.  Plus, I must add that it was the most respectful sale I have ever experienced.

In private discussion with the sales manager he volunteered that he had about $90k in my car, though I was effectively buying it for $75k.  In response, I suggested there was "trunk money" but he denied Porsche does that.  Then I noted in astonishment, that on the paperwork he had sent me to take to my bank, it was noted that his bank was still to be paid off, to the tune of $90k after TWO YEARS of floor-planning.  He denied this, saying the car had long been paid off, but I know what I saw on HIS paperwork.  That sort of closed out our shop-talk as my buyer arrived and we all did our courtesy trades and I drove home, paper-plated happy.

Anybody else experience this three-way?

Jack_Hagerty
Moderator

"Anybody else experience this three-way?"

Not this kind, no!
Soggytom
Intermediate Driver

Come for the article, stay for the comments. Fabulous. I need me some popcorn...
edozeph
Intermediate Driver

Great article. My brother in law sold cars and was chief financial officer (or whatever the title) for Toyota in LA for some time. Lots of stories. He helped us get credit checks on potential renters for our houses. Very similar tone, it's just business. Law of the jungle. He complained, but he thrived on it. He was a closer. In golf too. Lousy off the tee, "I got nuthin" "no good today" made you complacent, then on the green, he would sink the thirty footer to take the hole. And usually the match as well. Everybody loved him.
TigerTiz
Pit Crew

I am so glad that I gave up selling cars...
ChevyDave
Detailer

Nice article, thanks Jack. Let's hope your sources are right about that six-month prediction to free-flow availability. Personally, I think we'll see it extend into 2023.
Anyway, the only thing I'd add is that not all Dealers are adding second stickers because not all manufacturers bump sold order to the front of the line. In those cases, if the Dealer wants to increase their allocation, the only way to do it is turn the product more quickly and a second sticker doesn't exactly encourage that.
wirekat
Intermediate Driver

I got the car gene from my uncle. He worked on cars his whole life. He owned a couple of small dealerships that sold mostly used cars. Some of the stories were pretty unbelievable. He said that when he wasn't busy turning back odometers, he was doing battle (literally) with the other used cars lots. He also found a many interesting items that were left in the vehicles. Money, guns, liquor, condoms, marriage certificates, glass eyes and dirty underwear.
I've paid handsomely for my car education but kept making "new" mistakes. Just this last week I added the experience of "buying a wrecked car through an on-line auction" and picking up said car that started but didn't run. Fun times.
Sadly we left a dealership that we bought 6 cars from (same salesman) , because we couldn't stand the service department. The wife's latest SUV has "lifetime oil changes" (another lesson) but she despises taking it to the (new) dealership.
Maybe I told this story before but I have particular good luck in getting car sales people to leave their jobs. This has happened no less than 5 times. I buy a car, go back for service and the salesperson is gone. Some of them had been there for years. No, they didn't die, they just started a new career.
Jack_Hagerty
Moderator

If it makes you feel any better, most salespeople either leave a dealer within 90 days or stay for YEARS.
hyperv6
Racer

Good advice here but mostly common sense if you do your homework. The trouble is most people never learn the process and what they should pay even in this day where the web gives you mostly all you need to know.

We went in to the dealer in July. We wanted to upgrade the wife’s SUV. It just happened the one she wanted was at the closest dealer. This seldom happenes.

I went with no expectation of making the deal as with shortages I was not sure they would deal. I did go in with a GM family discount deal as a back up.

First off the salesman lied and said the dealer was not taking the GM discount. I confirmed later it was not true. So I get up to walk.

Then he offers a deal about the same as the GM price. They may make more from a straight deal than the GM deal? Either way it got me to the number I needed on the new vehicle.

Then in this day of high resale he came in $5k under what I would take in a trade. So I got up to walk. They came back and met my trade price that was just $4k less than what I paid 5 years ago. I could have sold it privately but with the high trade I was willing to do the trade.

After we made the deal I save $2k on my purchase with my GM card money.

This whole process took 4 hours to do.

The keys to doing a good deal are these.

Do your home work know what you should pay and know what your trade should be before walking in.

Know what you want before you buy. Your first trip in should not be to buy.

Do not get emotional over a specific vehicle as they build more everyday.

Work the web. I have traveled to save a good deal of money. I even made a deal on a car while at work and all I had to do is go in and approve the car before the sale. They did a dealer trade to get what I wanted.

Know your fees and loan options before shopping.

Look for deals like the GM card where you can take up to $1k to 3k off the deal you make. I have done this enough that I literally saved enough to pay for one car.

Most sales people are decent but there are a number of dishonest ones to the better prepared you are the better. If you have a dishonest one walk. I had one once would not come off a sticker price on a truck because it was a limited edition. Well it was not limited. I walked.

The better educated you are and the better you are in control of your emotions the better you will do.

Too often people get car fever and the sales staff will use it against you. It takes a strong will and personal control but we all are capable of this if you really try.

If you are really bad at buying cars take a knowledgeable friend.

I hate buying new cars but there is a satisfaction in getting a good deal at the end.


Rally43
New Driver

Lots of Dealership hate posts from Hagerty lately.

Not all dealers prescribe to shady tactics just like not all journalist’s should be tagged with the non reputable ones.

Im wondering if Jack feels the same paying the huge increases in food prices ? Do the same principals apply for grocery stores ? How about Tractor Supply where the trailer I purchased for $699 3 years ago is now $2,099 ?

How how about car insurance costs ?

Auto dealers net profit in 2019 was 2.3%. Excessive to say the least.

Hagerty insurance reported $25.4 Million Earnings before interest, taxes, depreciation and amortization. How can we apply some of these rules to insurance costs ?
Jack_Hagerty
Moderator

Does this feel like an anti-dealer article to you?
BMD4800
Gearhead

How is your buy-here, pay-here business? You get to dip your beak in the 19.9% financing?

Most insurance carriers lose money on PIFs, good profitable ones are 4%, but they aren’t like Hagerty. The big names make their money on the life insurance trash they sell and the restrictive property insurance claims rules.
Don’t hate the player, hate the game.

Never, ever forget: borrower is slave to the lender. Talking about a deal, while financing the purchase. Fail.

Unless you have a stack of cash to deposit, and trigger the obligatory reg C investigation, they will know your cash position.

The same folks that champion their dealer negotiating skills stop off at the Dutch Bros for a $5 cup of mediocre coffee.

Bottom line-what you want vs what you can afford, rarely intersect.
Soggytom
Intermediate Driver

Wait- you've got your F-250!! Hooray! Way to bury the lead. Still loved this one, and have shared it several times.
Jack_Hagerty
Moderator

I have it and it is BRILLIANT. Can't figure out how they will make the next gen 2024 SD better.
CoreyG
Intermediate Driver

"Save your ethics discussions for your children and your church group. This is business. Always has been." Never have truer words ever been spoken, most people use ethics to get over on others or simply hold onto what they have, shame you into something like an EV or living a life that is not for you.
BMD4800
Gearhead

Those that use the suggested arguments are not ethical, nor particularly religious.

Those that prey upon those who are ethical and religious, are the pond scum of humanity that are often found dead in Scottsdale apartments after filming sexual encounters with bar maids, desperate housewives, and Hogan’s Heros groupies.