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Yeah... take it from me- Red McCombs was charging his Toyota store 60k a month in rent. Granted that lot could hold 1300 units right by the side of the highway (good location in san antonio)... But that's a lot of rent- and it's not that easy to overcome selling corollas.

Did you have time for the races? KY may get poker no? Where is that at right now? If you know of course.

Nope. i don't know nearly enough about horseracing for betting on it to be +EV. KY getting poker isn't terribly important to those of us living in Louisville because Horseshoe has a casino half an hour away. I guess anything is possibleon the poker front?

Alright- we're going pretty far off topic here... Does anyone have any questions about actual negotiation issues? I really wasn't expecting this to be 'ask me anything about car dealerships'- but it's sorta worked out that way...

OK, I got a car negotiation question. I found a new, 2010 model out of state. I can fly there for $54 on airtran and drive it home though, so no big deal. I put in an internet price request, and a salesman called me and before I even ask he says "we've got a deal"

They bought the dealership last year and still have this 1 2010 model to move. He offered it to me right off the bat for $43,900 and they'll have a driver come get me at the airport.

MSRP is $54k, Invoice is $49k. I said I'll call him back this morning. My plan was to offer $42,500 and stand firm, willing to walk away from it. I will say though, even $43,900 is a great deal so I'd hate to miss it.

Seems like I've got them by the short hairs though, they really want to sell this. I don't want to be greedy though, what's my play?

Stuff like this happens sometimes. You're actually completely wrong about who has who by the short hairs here. They've already decided to 'whore the car out' in car dealership parlance. They're probably eating a loss on selling this car to you- but it's the last 2010... And that's normal.

If they don't sell it to you they'll sell it to someone else for 43,900 IMO. I doubt there's much room at all for negotiation- and I'd snap take it if I were you. Think for a second- you're getting a basically new very nice car for 10k off the sticker. Don't be greedy- take it.

EDIT: It's important to realize that for them on this car it's a choice between auctioning the car off and selling it to a customer. My guess is they could reasonably get 43k at auction AFTER fees. It's pretty unlikely they're going to give you a better deal than they could get for less hassle just wholesaling it.

Cool, thanks. I just didn't know if they would come right out with their rock-bottom price. I guess there are times where you just take their first offer though. I think it's easy to overlook that by being very patient like this and looking for things like holdovers, you can sort of take negotiation out of play.

It's sort of like job-hunting. They say the best time to look for a new job, is when you are happy with the one you have. Then, you can take the emotion out of it and truly look for the best deal.

I mean there's no harm in making a lower offer- and I definitely would. Just don't expect it to actually work imo.

EDIT: I just re-read my own post and realized that there's a really important concept that I'm just assuming is 'common sense'. In a negotiation saying to yourself "I'll hold firm at 42,500" can be really bad. It's important to actually know what your own parameters are- but just because you know you're bluffing doesn't mean you shouldn't bluff. When you make an offer there's always a random non zero chance that the other guy will say 'yes'. If he says 'yes' you make money. As a result you should pretty much always counter offer instead of snap accepting anything.

In this specific situation I'm not 100% sure that 43.9k is their bottom price- but you can bet your ass I'm going to find out. Negotiation is to a large extent less about what you'll do and more about finding out what the other guy will do. I call this process 'price discovery'. Essentially in a negotiation both parties interact until they find a price that is within both parties parameters. The less information you give up about your parameters and the more information you gain about the other parties parameters the bigger your edge.

can you give some warstories? Sale(s) you are proud of, kind of like showing a hand you won in a special way or somethign that you are proud of.

TBH the really big deals I'm not really as proud of as I used to be. My biggest single commission ever was off some old lady who I'm fairly sure didn't care about the price at all.

I'm more than happy to tell whacky stories about the dealerships though...

I guess I'll start with the tale of Cal. Cal is probably the most magical salesperson I've ever met. This guy was a minor league baseball pitcher who blew out his arm and started selling cars on a whim. When I met him he was making an easy 120k a month selling cars. Yes- I just said 120k per MONTH. Cal was the #1 volume toyota salesman in the nation. In 2004 he sold 23xx (I don't remember the exact number) toyotas. That's just shy of 200 new cars per month and the best part is that it doesn't include used cars- which he also sold a ****-ton of. He had three guys on his own personal payroll who would go out onto the lot and snag customers. Their entire job was to walk the customers around, find a car they liked, and bring them in to talk to Cal- who spent the time when he wasn't closing customers sitting on his ass in his office playing playstation.

Cal was and probably still is so fantastically successful as a car salesman that car dealerships bent over backwards for him. He rarely shaved, wore a faded minor league ball cap a faded toyota polo and jeans. This was at a dealership that didn't allow salesmen to wear polo shirts in the summer... in Texas. Cal and his cronies acted as if they owned the dealership- and in a way they did because Cal was probably 15% of the dealerships volume... And we were the #1 dealership in Gulf States Toyota (basically all the states you'd think).

The thing that bothered me about Cal was that he liked to play his life on easy mode. Cal is insanely gifted. He's just one of those people who can make things happen. Anything he sets his mind to he doesn't just do- he makes it look pathetically easy. As a result I'm firmly convinced that instead of having a <100M net worth he probably could be a billionare if he was willing to work for it. For some reason Cal has true 1:10,000,000 talent- and he squanders it selling cars.

You can easily see his attitude towards life in the fact that when Cal plays video games in his office he always plays the game on the easiest setting possible- and blows it up. He'd be sitting in his office playing Madden beating the computer 128-0... And enjoying himself. Cal doesn't want a challenge- he just wants to have people think he's the greatest thing ever. Because of that he's almost a tragic figure to me. Sometimes I think he sold his soul to the devil to be rich, and the devil ****ed him by making him the greatest car salesman alive .

I'd be interested to hear some anecdotes of how Cal talked to customers.

Very very straightforwardly. His style was entirely about volume- his strongest asset was his insane ability to get people to make decisions. He was very very good at getting to a persons real objection, nailing it down, solving it, and stitching the thing up.

Some of his favorite phrases were "I don't know anything about the car. If you want to know something cool about the car ask that guy (motioning toward his guy)", "Alright, cool so I'll get your paperwork over to finance", and other extremely casual stuff. Cal really didn't seem to care one tiny bit if the customer bought the car or not- and they almost always were out of his office in <5 minutes. I honestly think the total lack of pressure or desperation put people in a mental place where they could pull the trigger. He made making a huge financial decision seem like a very very small and obvious thing.

When customers were getting really hard to work with and he was at the lowest price he could go (and he got there really fast with hard cases- he seemed to have an almost supernatural knowledge of when the customer was going to snap) he would literally turn around the computer monitor on his desk to show the customer the dealerships cost and say something like "They won't let me sell it for less than 100$ over that price. They cost the same all around town, so if you really want this particular type of car you aren't going to do better... I just thought I'd save you some time"... Seeing the blinking ADP Unix screen turned over even the most obnoxious customers .

EDIT: The strangest thing about Cal to me is still the fact that he thrived on having people kiss his ass so much... I mean his cronies weren't exactly amazing specimens of humanity and they were basically his entourage. They literally never seperated their lips from his bony Irish posterior... ever.

Cal

I really hope it's not coming across like I'm just some envious bastard who hated Cal for his success. I mean I obv wish I had the talent he has in his pinky- but he'd had a hard life w/drugs, women, never saw his kids, and etc so I probably wouldn't switch places with him. Being an outlier in talent to the point where everything is easy doesn't really sound that appealing to me.

LOL Cal is also the guy who once told his insanely hot 11.0 on a 10.0 scale girlfriend "Babe you're one out of a million. Unfortunately for you there are 38 million people in Texas, which means there are 37 more just like you in line behind you, and don't forget it."

+1 to this and more stories about Cal and others in general.

Also, did he sell so many cars while still making a decent margin for the dealer? That is, was his success partly due to being willing to sell for cheap?

My mom was the top salesperson for this company that would often lower their prices by as much as two thirds in order to generate front-end sales. They always lost money on the front-end sales, but it gave them an in to upsell on the back-end where they could make millions, so lowering the price on the front-end was next to meaningless for their bottom line, but obviously generated a lot more sales, ergo opportunities to upsell. My mom refused to lower the price, because she thought it was insulting, and still outsold everybody in North America. Was Cal the same way?

Cals gross profit numbers were weakish on new cars and spectacular on used cars. it's hard to make much front end money on new toyota's in a competitive metro environment because there is tons of advertising repping the lowest imaginable price, and it being toyota educated customers more likely to have an internet connection. He more than made up for that by crushing souls with used cars. I think he did something stupid like 3100$ front and back on 60 units one month . For reference points the average front/back profit on used was 2648$ that month.( I still remember that exact number- probably because it affected my bonus- we (management) needed 2650 to hit the top tier )

Yeah the toyota store I worked at was all about giving new cars away front end and pillaging the back end. You build a lot of goodwill with the customer when you show them the invoice on the screen and offer them the car for 100$ over that. It also makes them feel like they have a little more money to spend on a warranty and such.

Cal's approach reminds me of PUA. Desperation is horrible in sales, but it looks like for Cal the converse was also true. Thoughts?

I don't want to derail thread, but on some level salesmanship is a form of negotiation IMO.

Yeah discussing Cal is definitely relevant and I don't consider it a derail at all. Desperation is pretty much terrible in most human interactions. We tend to interpret it as fear which probably on some subconscious level makes us want to run away.

I know that I probably would be very worried about getting robbed if someone approached me on the street and tried to sell me something while looking very desperate. Desperate people do desperate things and the vibe just comes off them in waves.

Should I expect a lower price if I am going to pay cash?

What separates good dealers from mediocre / bad ones from a business perspective?

Part 1: Customer Management
A good firm process for customer management. I'm not talking about managing customer records- although strongly encouraging salespeople to follow up is important- I'm talking about having a plan for every customer that walks through the door.

The first car dealership I ever worked at was a Chrysler dealer. I was 19 years old and I had NO idea what I wanted or was looking for. I took the bus there for gods sake- I didn't even own a car .

I got lucky in that the dealership was actually really really good at what they did. The process was designed to maximize the natural strengths of new salespeople and minimize their weaknesses.

Essentially when the customer came onto the lot they were immediately greeted by a salesperson. That sales person then followed the 'five steps to the sale' which they made us memorize- and so far to date I haven't found a better model for selling anything be it a car or toothpaste.

1) Meet and Greet. Make small talk. Build some rapport. Make the customer think of you as a real person. This should take 1-2 minutes and a salespersons social skills at this stage are crucial.

2) Qualify. Find out what they want/need. Find out what they're trying to accomplish financially. Seem as much like a consultant as possible.

3) Land. Find a vehicle that the customer is attracted to that meets the necessities you found out about in qualification.

4) Sell. Show off all the things that make the inventory great. Build as much value as you possibly can in the customers mind. Make them fall in love.

5) Demo. Make the customer try it out. Once they've driven a car that is infinitely nicer than the car they have they'll be emotionally attached- and this is probably the biggest and best hook you can get when it comes time to haggle. NOT demoing a customer would get you brutally berated by management. Not demoing regularly would get you fired no questions asked.

That's basically all a new salesperson had to do- because when you brought the customer back in your boss took over. This allowed the customer to be handled by a fresh enthusiastic salesperson who wears down their defenses- and then be handled by a cold blooded closer who had shut down probably 10k+ car deals. Gradually salespeople who survived handled more and more of their own closing- because the rapport you generate on the lot does put you in a better negotiating position than someone coming in without any relationship at all. That being said it's hard for a new salesperson to **** up sitting there and shutting up.

That's the other thing. If the closer is in the box with a customer you keep your damned mouth shut. Period. When they leave the box you stay and make small talk- you don't know anything about the deal and you don't talk about it with the customer.

Once the customer is closed it becomes a race against buyers remorse. Rapidly processing customers through the finance department is crucial. Salespeople should be able to fill out initial paperwork with the customer in under 5 minutes and take them over to finance.

The next step was a work of genius. While the F&I people input the customers information into the computer the aftermarket girls came out and took a shot. They would bring the customer in and attempt to sell them stuff while batting their eyelashes/making girl talk. By the time they were done they'd go right into a finance office to finalize paperwork and get sold back end stuff.

While the aftermarket/F&I process was going on the salesperson would be prepping the customers car. When the customer came out of finance they would have a pretty heavy feeling of relief/euphoria and they would be immediately greeted by a smiling salesman with the keys to their new car.

One of the important features of this system is how it engages the customer from end to end. They literally aren't allowed a moment to think- and when it works they get processed seamlessly from the moment they open their car door upon arrival to the moment they drive off in their new car.

This is hardly the only method that works- but most successful dealerships are obsessive about having a plan at every stage. Institutionalizing best practices for dealing with the customer leave less room for **** ups that cost the dealership money. They also allow management to have a very accurate idea of what is going on. They manage to take as much variance out of the process as possible.

Part 2: Inventory Management

This is a much shorter section than Customer Management- but it's important. The manufacturer makes a lot of cars that are inherently hard to sell. Either they're too expensive for the type of car they are (enter a 38k sticker Grand Cherokee w/o leather that has really weird options) are a truly hideous color, or are a model that just doesn't sell (Meet the 2004 Chrysler Crossfire everyone!). Sometimes it's all three. These are the kinds of vehicles you have to take a loss to get rid of. It's important to fight the manufacturer every step of the way to keep the cars that come off the truck sellable.

The flip side to this of course is the used car lot. There is an art to keeping a good used car lot- this is why good Wholesalers make a lot of money and are absolutely worth every penny. It's possible to have a used car lot with ****ty everything but inventory be a huge success.

hahaha respect.