Monday, March 26, 2012

An Eagle Scout Gone Bad: Rationalizations of a Car Salesman

The following are comments posted by a car salesman last week on one of my blog articles. The post came from "Anonymous", but he identifies himself as “an Eagle Scout with morals and ethics intact”. He refers to himself as “Johnny”, which may or may not be his real name.

His letter is interesting because Johnny’s comments perfectly capture the rationalization of car dealers and salespeople about why it’s OK to take advantage of their customers. It’s OK because deceiving a customer is necessary to make a profit and profit is a good thing. I guess, the greater the deception and the larger the profit, the more good it provides. Johnny is intelligent and articulate (although his spelling and grammar leaves a little to be desired) and he truly seems to believe what he’s saying.  

If I sent Johnny’s letter to every car dealer in the United States, a majority of them would not only agree with him but applaud him for saying it. Many auto manufacturers also follow Johnny’s brand of faulty logic and refuse to influence their dealers against deceptive tactics like dealer fees and addendum labels, which I call “phony Maroney’s”. Manufacturers know that for a dealer to sell the maximum number of cars, he must sell some at exorbitant profits to those “suckers” who can be taken advantage of…suckers like young first time buyers, the very elderly, the uneducated, and the language impaired. Large profits from these victims allow dealers to sell more cars near or below his actual cost, increasing his normal volume in order to hit factory objectives which pay large bonuses to the dealer.  

At first I thought I would answer all of this car salesman’s rationalizations and point out his lapses in logic. On further thought, I thought it best to leave it completely unedited, with no retorts, challenges, corrections etc. and let you be the judge.  

The following comments are unedited:
PART ONE-Hi. I've been in car sales for 3 years now and at first (I am an eagle scout with morals and ethics strongly intact), I felt guilty when I would make full profit on a consumer. Sometimes that would pay me 1,000.00 in my pocket to help support my family of four. Which supports the economy to btw... Then my mgr asked me how long will that thousand dollars last me, a week? I said yes maybe two if I plan accordingly. How long do you think your client will use his new car, helping him get to work to make money to feed his family? Three maybe four years before they trade it in... Let me ask you these questions earl, and EVERYONE else: since when is profit a dirty word? And who wins in the long run in a car purchase transaction? Why can every other business in the UNITED STATES OF AMERICA Mark up their products 2 or 3 times the cost making houge profits (300%) while car dealerships make maybe 1-3% of a profit margin? I understand a car or a house is a big ticket item so they can be negotiated (so said somebody one day), but one day I would like to haggle for the price of a t-bone at Publix, or gasoline or underwear or shoes or suits or GROCERIES or the cell phone bill or the electric bill. Seems as if everything for sale that you and use to Live goes up in price doesn't it? Um, wouldn't it be nice to see the invoice price of oil and bargain for gas? I think I made my point.

PART TWO-I work 60 hours a week selling a quality product, New or preowned, and I get paid by commission only. Most new car shoppers research the invoice price, market price, kbb price, blah blah blah. I understand that price is important as I am on a budget just like you... but what about the person that spent 2.5 hours presenting, explaining, and demonstrating the vehicles' features and how they will benefit YOU? Do you not see the VALUE in that salesperson's time? Isn't he/shemance allowed to make a decent wage for working hard for YOU? Nope and nope. Why? "Because car salespeople are scumbags and are trying to screw over every hardworking person. How can they live with themselves and make a profit? How dare THEY?" Dealer fees are profit, but it's very little in the grand scheme of things. The state of Florida makes more on cars than the dealership does about 80% of the time.

PART THREE-Since the internet changed the car business years ago to help the consumer get a fair deal (a couple hundred bucks over invoice), dealer fees came out to help keep dealerships open by making a DECENT profit and provide a service to the community helping people find what they want to go be mobile to have FREEDOM TO DO WHAT THEY WANT TO DO. nice huh? Again, profit is not a dirty word. We are providing a service and there is nothing wrong with getting paid for working.
I'll end this diatribe with an interesting fact: we say "Buyers are liars." It's kinda funny that 90% of people who are pointing a FINGER at car salespeople calling us scumbags are the ones who lie and treat us with disrespect and disregard us as human beings. My granddad told me a long time ago, "johnny, if you point your finger at someone remember that there are three of your own pointing back at you."

FINAL PART-I hope the day comes that the dealer fee goes away and EVERYONE pays MSRP. or EVERYTHING can be bargained for. Including gasoline. Unfortunately neither will happen so I can only hope that everyone I meet will end up liking me, my service, my product, and the VALUE of the car I am helping someone purchase, and that value exceeds the PRICE for which they will pay. Good Luck to you all, Godspeed, and try to treat us car guys with a little dignity. Come in well armed with.your pricing sheets and if we work hard enough, decide what percentage of profit we should make if we help you find the right car for your needs and if you received a world class experience. Think of it as a tip. Like a server in a restaurant, which I used to be... Carrabbas btw. Yum! A good server can make 20-29% of total sales in a tip for an hour worth of work. And good car salesman can work up to four hours helping people find a car, and not make a dime when the customer walks out because we didn't lower our price by 130.00. Wtf? Think about that. We put our pants on one leg at a time like you. And we go to work to put up with your bull. So just be cool.

One more thing. Where does a business get the money to pay its employees? From their profits of course. Dealer fees are.profit but it does eventually get distributed to pay the detailers, the lot porters, the office ladies, the receptionist, the mechanics, the parts dept, the electric bill, the gas we put in your car when you purchase it, the overhead, etc. Just another business trying to keep people employed to help spend money to keep our dragging economy from crumbling. Blame the oil companies and Starbucks. 6.00 for a cup of .30 coffee? Who are the ripoff artists now

Johnny, if you read, this, please call me and let’s discuss your beliefs about how cars are sold. My personal cell phone number is 561 358-1474. I promise to listen to everything you say with an open mind.  I would like you to visit my dealership in North Palm Beach and see how we do business. I would like you to talk to some of my salespeople and ask them how we sell cars and how we feel about our customers. My dealership is the largest volume, and most successful one in Palm Beach County and one of the largest in Florida and the USA. I promise to keep your identity confidential. I don’t have to know your real name or the car dealership you work for. I’ll even buy you lunch. If you like the way we do business, I might even offer you a job. What have you got to lose? By the way, respect and admire that you attained the rank of Eagle Scout. I was a Boy Scout, but never made it past the rank of Star.  

1 comment:

  1. yes - car dealers and sales people deserve to make a living for adding value. But car manufacturers and dealers have got to stop their misleading advertising and really, they need to change the way they sell cars. It is not fair that they tell customers their cost is "X", when in fact, their cost is much less after rebates and bonuses. The sales process stinks and needs to be revamped - starting with requiring car manufacturers to be more transparent with their costs and upfront with their profit - treat cars like the commodity they are . The service process stinks too - service reps should be paid a salary and not be on commission - the need for repairs should be based solely on whether repairs need to be done and benefits/costs of preventive maintenance disclosed in writing. Repairs & maintenance should not be based on the service personnel getting a commission by convincing you to get the service, whether you need it or not.

    Congrats to Mr. Stewart for speaking up. I really look forward to his speaking up after he leaves the car sales business. It would help if former car dealership managers start speaking up. And it would help if our legislators worked on behalf of all taxpayers and limited corporate lobbying - or at least give shareholders more of a say in how much corporations can spend on lobbying and require transparency.


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