Why care about a dealer. He's already moved on to the next sale and forgotten about you.


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Yeah. They are lying. Where in NC and what dealer?

 

For every dollar they lose on a new car sale, they'll make 4 or 5 (or more) on warranties, rust proofing, and service. If he really couldn't handle it, he never would have agreed to it.

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This dealer is VanYork Honda, Highpoint, NC

 

No dealer actually loses money unless they make a mistake and keep up their end of the bargain. They all make some amount of money. They have screens to show you that they're losing money but they do not. If they lost money on any sales, they wouldn't be in business. They are trying to make you feel guilty and wiggle out of not providing you things from the sale they agreed to in hopes of making more money. I would not worry about it.

I assure you that 2 years later, if you need a new car and walk into their stealership, they will be all over you with their tails wagging all to sell you a car.

As to them paying cash to the parts department, that too is a tactic. Most dealers require the various depts to carry on monetary transactions back and forth i.e service dept buys parts from the parts dept for a show. Its all funny money and at the end of the day comes out and goes into the same pockets.

Congrats on your purchase and enjoy the ride. Don't worry about the dealer trying to impose a guilt trip on you. I applaud you for not backing down and demanding for what was agreed upon.

 

DV is 100% accurate here. The dealer didn't lose any money. He is just trying to make you feel sorry for him. I like my dealership and my salesman....but they are still in the market to make money by selling each car for the most they can.

When I bought my Pilot last summer, my salesman (from whom I have purchased multiple vehicles) made the absurd statement that "we've never sold one this low before". I immediately called BS on that statement, and I told him that I would pay him $500 cash if he pulled out the paperwork on every 2012 4wd EXL/RES they had sold to show that my price was lower than any other. I know I got a very good deal on the Pilot, heck maybe I even got a great deal on the Pilot, but I'm confident I didn't get the lowest price ever! Dealers will say anything to try to build sympathy.

 

He initially did not deliver the cargo tray initially, but later when I push him to give it to me today, he started doing all kinds of crying. Having to pay ($87) out of his pocket for the cargo tray etc. I stayed put to what was negotiated and he eventually paid cash in the parts department (in front of me) and gave me the tray. Later he told me that he never wants to make another sale with me and lot of other things.

I just did not had time to deal with him so I just told him that I am not too excited to shop here again.

Unless I'm reading this wrong, the sales guy was speaking about himself, not the dealership. Possibly he screwed up the sale and did not want the sales manager/dealership to find out as he is on the thin line already? If the cargo tray is nowhere listed in the sales paperwork, then he just made a mistake and he might be paying out of his pocket to save his behind. Else, if it was listed, it's not a big deal for the dealership

My 2 pesos

 

Ya sound like he negotiated something in the deal that wasn't in the original deal with his manager so maybe he paid out of pocket. I would think if it was a ploy to make you feel great you got a good deal by the sad face and "paying out of his own pocket" then he wouldn't have said he didn't want to do business with you again. Almost sounds like he goofed. Maybe a newbie.


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Ya, I agree. You also have to consider the cost of the cargo tray wholesale vs. retail. College Hills honda's website offers the tray for $80 plus shipping, and you know they have to make money on the deal. On accessories-honda.com you can get the "protection package", All season mats, cargo tray, and splash guards, for $250.
I got about half of my accessories when I bought my 2013 TE, got a great deal on my extended warranty, fair price on my trade in, and my OTD was smoking good. Have a great relationship with my salesman and dealership still.
Your dealer/salesman doesn't want you to come in for your maintance very bad. That is where the dealership makes a lot of their money.

 

Your dealer/salesman doesn't want you to come in for your maintance very bad. That is where the dealership makes a lot of their money.

Sales Dept and Service Dept two diffrent Depts. The sales guy said he did not want to sell him another ody if I read OP's post correctly.

 

I have a 1967 Schwinn Hornet for sale, fair condition...Only $899...but I'll be losing money if I sell that cheap!

 

It must be true......I read it on the internet!

 

You are only looking at one side of the deal. That is what the dealer wants you to see. Maybe the selling price of the car + accessories is great, but you neglect to mention anything about your trade in deal. It could very well be that your trade in was worth a lot more than they gave you. I recently did a deal and all the dealers initial trade in offers were at least $2k under the real trade in value. So your dealer may have the appearances of taking a loss on the sale of the new car, but in reality he made a killing on the trade in deal.

 

I am a Honda salesman in the Chicago suburbs. I've been selling cars since June 2013 and it's really opened my eyes to things.

1. It is entirely possible for a salesman to not make MUCH money on a sale. Our commission is a percentage of the amount over dealer cost. When the car is sold cheaper and cheaper, our paycheck gets smaller and smaller. Sure, there are a lot of slimeballs in the business, but at the end of the day, when I make a $50 minimum commission on a sale, it's not fun. And it's usually when a customer was indignant and wanted "the best deal". I understand negotiating and I have no problem with that; I just don't understand why people don't see I'm just trying to make a living.

2. I have only twice told a customer that I'm not making a lot on a sale. One time the customer was genuinely curious. The other time, the customer was a complete douche who was adamant that I was making more than $50 on the sale. I'm not trying to get sympathy. But let me tell you- it is exhausting when negotiations take hours and I dislike the customer and the customer dislikes me at the close of the sale only to make a $50 commission.

3. I don't like seeing people get ripped off. What I do like is when a customer lets me make a decent commission and they are happy with the vehicle they purchase. That is what makes it worth going to work everyday. I sold a car for $1,000 over invoice once and made a $600+ commission and the customer was just the happiest person about her new car and was pleased with the discount off MSRP that we had given her. That is the best kind of sale there is!

My goal as a salesman is to help people find the car they want for a fair price where they get a good deal and I get a decent commission. Is that so wrong?

/rant

 

I am a Honda salesman in the Chicago suburbs. I've been selling cars since June 2013...a customer was indignant and wanted "the best deal".

Sorry, but I want "the best deal" when buying anything, don't you! Can one imagine how indignant it is to want a good deal? And goodness me...with all of 11 months of experience....
FWIW, advice from a retired Chicagoan...Chicago, and all of Illinois, is a great place to be FROM.
GL Joe

 

Here's the facts folks. Dealers and sales people need to make a living. They are in business to make money. The manufacturer also wants to make money. So while there are definitely skinny deals being done all the time, they also make a lot of money, primarily in the service and parts departments (and definitely in the F&I / Business office). These are the areas where dealers typically make most of their money. A strong dealer will also make good money in their used car department. New car *usually* is a losing proposition because the competition is so fierce. Doesn't matter what brand it is - most (not all) new car dealers do not make much, if any, profit overall in their new car departments.

So why even bother selling them?

Dealers receive a holdback (typically 3% of the dealer cost) AFTER they sell the car to a customer. Once that happens, the dealer gets their bonus. But if they dealer trade for a car, they usually won't get this amount. So they are always motivated to sell from stock. Plus they pay floorplan costs for inventory but that's another story. Also, many manufacturers will pay quarterly bonuses to dealers if they hit their CSI scores and sell enough to hit their sales targets. So again, they may literally sell a car at or below their invoice cost just to make these targets.

 

True points, my friend. What I was getting at is that my income only comes from point of sale. Service and F&I make millions for dealerships, but I can assure you, I don't get paid when someone comes to service or buys a warranty. My only income is when they purchase a vehicle and when they purchase accessories.

Sales managers are paid salary (usually six figures). There are three F&I managers at my dealership, with 15 sales associates (F&I managers make commission, but I'm getting at the fact that there are a lot less of them than there are salespeople.)

I know there are a lot of shady characters in this business. I wish people didn't think I was out to rip them off. Retail exists for profit; it's as simple as that. Apple sells iPads because they make money doing it (of course, the people selling those iPads make an hourly wage.) I'm not trying to retire on each customer, but it sure is nice when the customer lets me pay my bills with my income.

 

As a fellow salesperson I have a few suggestions for you Eric.

1. The customer, including members of this board, don't care anymore about your or my commissions or paycheck anymore than they care about the kid at McDonalds making their hamburger for minimum wage. And not that they should. They should worry about their own household and be smart, because if everyone walking through the door spent their money unwisely and had a 550 credit score we wouldn't have anyone to sell to.

2. The only way to survive long term in the car business, especially in the internet shopping age, is to build a client base of people who feel great about working with you. Enough so that they will come back for many years/cars to come and who recommend their friends and relatives to see you. That can only happen if you approach every deal with the attitude that helping the customer get the right car is the most important part. The rest will come naturally. Both the customer and the salesperson want to rush to the price. The customer so they can get out of there and try to beat it, and the salesperson so they can figure out if there is a chance to make a decent commission. Both need to remember if it isn't the right car then the price is a mute point.

3. Yes, there are a lot of shady people in the biz. Fortunately there are far less than there were 20+ years ago. The manufacturers with their focus on customer satisfaction survey's helped that a bunch, but we still bear that stereotype. Funny how realtors function nearly the same as we do without the stigma huh? Though my personal opinion of them is less than most of my colleagues.

4. The statement that dealerships make "millions" on service and F&I doesn't help your cause at all. While F&I in reality is the biggest profit center potential in a dealership, a crooked F&I guy can screw both customers and the dealer big time, so it is also a huge liability. Service/warranty managers the same way. I have personally been aware of dealers who have lost their dealership and went through personal bankruptcy after being audited by the manufacturer and found to be engaging in fraud. Also, even good service departments are being squeezed like never before and are operating on thinner margins than they were previously. Better cars, less desire for guys to become mechanics, exorbitant costs to stay current with software and equipment, etc., have caused the dealers overhead to skyrocket. You may notice the trend of single point/single dealer principle dealerships having become almost a thing of the past and that is because on average each store is making less money than it used to, so the big dealers are gobbling up the little ones because owning 5 or 10 stores each making a small net profit adds up nicely, but one small store struggles to justify the investment.

Keep in mind, your perspective from a Chicago store (3rd largest city in the US) is not necessarily reflective of the majority of the industry. If you take nothing else from this, reread #2 above. Good luck!

 

Car dealers make 2% declared profit, then another 2% on top of that from holdbacks, dealer incentives, etc.: https://www.sageworks.com/datarelea...article=136&title=Auto-dealers’-margins-thin-but-improved&date=February-26-2013

 

Yeah, it's posted on the internet so it must be true lol. Seriously, the OP was talking about an individual car sale deal, not a bottom line for the entire business. Dealers can and do lose money on individual transactions for any number of reasons, but the two most common are pricing errors that the dealer either has to or chooses to honor, and intentionally for the purpose of clearing out old inventory. For the record, once a buyers order has been signed by a manager it becomes a contract and is legally binding to the dealer. The customer on the other hand, in most states, is not bound to the transaction until they leave the dealership with the car. If you change your mind before that happens you are entitled to a full refund of any deposits less the cost of any modifications the dealer made to the car in good faith to effect delivery, so if they installed a hitch, mud guards, rustproof, etc., the cost of those items can be retained by the dealer. Again, MOST STATES.

 

I don't know any poor car dealers do you? One of them has $450,000 with me, & he only has two dealerships!

 

Great! So you know one guy who is pretty successful. You may even know a few more, none of which are in danger of standing in a soup line, but your statement is no more valid than me saying they ALL struggle and barely keep the doors open and lights on. In my 30 years of being in and around the business I have come to know and be friends with some who are wildly successful and others who lost their a$$ and filed bankruptcy. The majority fall somewhere in between, but there is often a very fine line between making a decent profit and crashing and burning. Like any other business you better have your finger on the pulse and know what your employees are doing or they can sink you pretty fast.

BTW, the article you cite states "slightly less than a 2% profit and says nothing about holdbacks, etc., so that INCLUDES all sources of income. They are obviously speaking of net bottom line from the entire dealership and not on individual deals. The opening line of the article also states "Privately held auto dealers in the U.S. historically work with thinner margins than do other types of private companies". Either you didn't really read the article and mistaken posted it thinking it proved your point, or you did it intentionally. Either way the manner in which you used it was misleading. And assuming from your statement about the dealer principle who "has $450,000" with you that you are a financial planner or in the field, what kind of return do your clients expect for a $5 million+ investment? That is about the minimum that even the smallest dealership with a new car franchise could expect to have at risk. I'll bet you can't keep a single client if you averaged a 2% return for them over 10 years.