There are things that some dealerships do to get people into the door that I don't like. Let me be clear, they aren't necessarily breaking any laws, nor are they inherently bad people. Unfortunately these things often work, I just don't like or respect these things.
*The Advertised Price
Fair warning everyone; If a deal is too good to be true....it's because it isn't true. I'm not saying that they are lying. However, the deal being advertised is only applicable to a very, very select group of people. For example, let's say someone is looking at one of my larger crossovers. The sticker price is about $33,000, and so at my dealership we advertise $33,000. A competing dealership (maybe in a bigger town) advertises the same new vehicle at $31,000! That's less expensive and you should definitely go buy it there, right?
Well, maybe...
If you scroll down to the bottom of their advertised price for that vehicle, there will be an "*". Next to said asterisk, it will say something akin to the following:
"Price includes ALL manufacturers rebates and incentives. All rebates are in lieu of special financing. Subject to approval, blah blah blah...."
Ok, I made up the blah blah blah, but the rest is there. So how do they get to that sale price?
Upon Further Examination:
$33,000 MSRP
$ -500 Owner loyalty
$ -500 Military discount
$ -1,000 Trade in bonus when trading in a specific vehicle(s).
$31,000 The advertised price!!!
So my customer goes down there, and asks for the advertised price. The other salesperson says, "No problem. Please let me see your current registration showing you own a car the same make as the one you are buying for the Owner Loyalty. I will also need to see your Military ID and LES (Leave and Earnings Statement) for the Military Discount. Finally let me go evaluate your trade that is one of the specific ones for which I can give you the bonus."
IF, they have all of that, they get the price. If not, then the conversation goes like this...
"I'm sorry Mr. Customer, I cannot give you the owner loyalty discount since you don't currently own one of our vehicles. And since you are not in the military, I cannot give your that discount. Oh, and since your trade is either non-existent or not the right model from a certain set of years, I cannot give your the trade in bonus. The price of the vehicle is $33,000.
Wait, what?!? That's right, they advertised a price that most people won't be able to qualify for. Oh and I've spoken about dealer fees in previous blogs, well it turns out that their dealer fee is $300 more than mine. Soooo, you Mr. Customer just traveled a few hours to pay more money. To be fair I did warn you. Oh, and if they do qualify for those rebates and bonuses at that dealership, then they qualify for them at mine. So, they still traveled a few hours to pay more money. Again, I warned you.
Why do they do this? Well, as I said, unfortunately it works. They also aren't worried about upsetting someone. They disclosed all of this on the website, you just didn't read carefully enough. Or you were hoping so badly for the "too good to be true" to be true, that some part of your brain blocked it out. Some people will then pay more since they drove all that way, or don't want to be embarrassed by coming back to me and admitting they didn't get the deal they were expecting. But don't be embarrassed. Come back, the deal is still good here. I'm happy to sell it to you.
The Big Sale!
This idea is that there are times of the year when dealerships have the absolute lowest sale prices EVER! Have you noticed that it seems to happen every month? Every. Single. Month. Yeah....
What is really happening here? It could be that they have a few old models leftover that they are truly blowing out. But it will only be on those few specific cars. If you want a different color or trim level, well back to full price for you. Perhaps they've gotten a little extra money from the manufacturer that they can pass on to you the customer, so...SALE! Or perhaps, they've had that money all month anyway, but they want to get a few more sales at the beginning or end of a month, or quarter, or the year. So...SALE! Can this work to your benefit? Of course, but depending on what you're looking for, a deal in December isn't necessarily any better than one in March. Especially since they'll have some sort of deal next month, and the month after that. I'm not saying that next months deal will be better, or worse, or exactly the same. But, don't let that influence when you buy. Trust me, you can get the deal of a lifetime at any point. (see http://mazdaintally.blogspot.com/2014/05/buying-carfrom-me.html )
If you let balloons, hot dogs, or a giant inflatable gorilla make your buying decisions, you're in trouble. Find a Salesperson you can trust, do your research, and make the right decision for you. A good salesperson will not only respect that, they will help you along the way.
Lower prices because of selling Volume!
This one always kills me. "They can lose money to sell me a car because they sell in volume." Work that through. Can you buy apples from the orchard for $1, and then sell them for 75 cents but make money because you sell more of the $1 apples at 75 cents? NO! You're still losing 25 cents per apple. But somehow in car sales it makes sense?
Yes, that was the hyperbolic version of the story, however that doesn't make it untrue. No, dealers don't sell cars at a loss to every customer. Yes, they can get some money from the manufacturer if they sell a certain amount of cars. But what makes you think you're the one that is getting it over on the volume dealership? That's like going to Vegas and thinking you're the one that will beat the casino. The house wins...always. And they should. It's a for profit business. If they don't make a profit, they won't stay in business. Inevitably, the response is, "Fine, let them make money off the next sucker, but not me!" To which I say, "Sorry, we lost money on the last customer, you'll have to make up for that." Full disclosure...I don't say that.
Here's the scoop. Every dealer of a particular brand pays the same amount for the cars as any other dealer for that same brand does. Being in a bigger market, or a bigger dealer doesn't mean the bigger dealer buys the cars from the manufacturer cheaper, and so can sell them cheaper. Doesn't happen. If a dealer is losing money on a deal, it's because they've determined it's something they are will to do on that one deal. It's not an ongoing policy.
"That's ok, Dave, we'll show up at the end of the month when they are trying to hit that number!" Well, how will you know whether they've hit their number or not? Maybe they haven't and you get lucky. Or maybe they had a good month already and have no incentive to lose money on you at this point. Again, we're back to the other blog post of how to buy a car from me (see link above). This relates back to the first part of the blog with those "too good to be true" prices from other dealers. Say it with me, "If it's too good to be true, that's because it isn't true".
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So, is any of this illegal? No. Is it unethical? Maybe? I'm not going to go that far. Do I think these are poor methods of dealing with potential customers? Yes. That's why I don't do that. Find a Salesperson you can trust. Develop a relationship. Everyone can win that way.
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