May 15 2008
Car Selling Tactics
To fully appreciate the tricks used by dealers, we must understand how dealers sell cars.
Car dealers do not want to give quotes. If they give you a quote, they know you will take it to another dealer and get him to beat it. And the next dealer knows that he’s in the same position. Their only hope of selling you a car is by getting you to commit to buying the car before you get the final price. This is very irritating and frustrating for customers, but entirely understandable if you look at it from a dealer point of view. They have two choices: Get you a quote and see you walk out the door, or try to get you to enter negotiations.
This leaves the customer with two choices:
• Wear the dealer down to the point where a quote is produced. Repeat this a sufficient number of times at different dealers so as to feel comfortable that the price is competitive. This will take the average person about 2 weeks and dozens of phone calls. It will also likely end in being “sprayed” by an unsuccessful dealer (see table below for meaning).
• Commit to buy and start negotiating with the dealer. It comes down to how lucky you are on the day (or if you believe you’re a better negotiator than the dealer). You’ll be unlikely to know with any certainty whether you paid too much. The general rule is this: The happier you are about buying the car, the more you have paid. It sounds counter-intuitive, but most people who have a reasonably pleasant experience do pay more. 20 years of experience has shown this.
The Tricks
Loss Leader Advertising - Very common, and very time consuming for customers. A dealer will identify one or two cars of a particular model. These will be the “worst” cars (i.e. the build date is very old - the car has been sitting in the yard for a very long time. They are also likely to be the least popular colour and with no options.). The dealer will then run a large advertising campaign based on these cars, and the price is (for example) $200 below cost.
When the customers rush in from all around town, they are promptly “switch sold” to another car. All the salesman has to do is to point out why the car is undesirable, and then get the customer to pay more for a better car.
Low Balling - Low balling works as follows: The dealer will give you a verbal price that is lower than any dealer can sell it for. He/she might even say something like “We should be able to do it for $xyz” or “Don’t spend any more than $zyx” and encourage you to go shopping around.
The buyer heads off to the next dealership, where - after considerable effort - he extracts a price that is higher than $xyz. On to the next dealer! After many hours of dealership visits (remembering that sales professionals are trained to keep buyers for at least an hour), the buyer is getting tired and disillusioned.
… so back to the original dealer who quoted $xyz…
Now the strategy calls for wearing the buyer down for at least 90 minutes without talking about the price. The more coffee/soft drink the better. It starts with “How about another test drive?” and gradually progresses to a deep friendship with the sales professional (as “we have to wait for the manager to get back”). The sales professional will be using techniques such as “pacing” (which means to copy the buyer’s speech patterns, body movements and finding common ground). Gradually building up with many small agreements (”Wasn’t it great to see [insert some positive current event here]? Yes it was”) towards one big YES in the end.
… and finally the time comes: The manager is back! And - shock and surprise - the $xyz you thought was quoted was not right! It excluded on road costs, or GST, or it was a mistake or whatever. The point is that we can’t do that price. Then ask: “What is the best price you have from another dealer? Oh, $xyy? SO if we can match that price, are you ready to buy?” Grab the credit card and “go see the manager”. Let the buyer sweat for 10 minutes while the sales professional reads a magazine in the managers office. Then go back with the bad news: “Sorry - we need your help to put this deal together. Another $700 should do it”.
And here it is: Well over 80% of buyers give up at this point and buy the car! Just too worn out, tired and hungry.
The Lap Dog Trick - When a customer leaves a dealership and says to the dealer they’ll look around for other prices, the dealer tells him/her to come back once the “best price” has been obtained. The dealer will then either match the price, or try to increase it slightly by taking advantage of the fact that the customer is sick and tired shopping and is itching to buy the car. This trick is very common and works very well for most dealers. It relies mainly on getting the customer to feel obliged.
High Balling - Offering an excessive price for your trade in. Some customers are attracted by this as they think they are getting one over on the dealer. Rest assured, however, that you’ll pay for it in the end, when the dealer charges too much for your new car.
Bouncing the trade in - Every once in a while, a sales person will have a go at this. He’ll contact you before the new car is delivered and say there’s an issue with the trade in. They will ask you to bring it back to the yard for an inspection and claim to have found it’s really only worth $500 less than what they have offered for it. If you fall for it, the sales person gets another $500 in his pocket.
Spraying - Also known as “throwing a hand grenade”. Dealers will pursue a potential customer until he buys. If the client ends up buying from a different dealer, the sales person that missed out on the deal rings you to get the bad news. When you tell him you bought elsewhere (at a very good price of $35,000) he says: “I sure hope you didn’t pay more than $33,000 for it!”. This is designed to make the customer feel as bad as the salesman. It also highlights just how nasty some people can be.
Some customers choose to avoid being sprayed by not giving out their phone number (e.g. saying it’s a silent number, doesn’t have a mobile and can’t leave a work number). At the test drive, they “accidentally” give the wrong phone number.
Time of the month - No matter when you walk into a dealership, there’s a reason to feel “lucky” according to the enthusiastic sales person. Early in the month, they will say they missed the target last month and are desperate to make it up. During the middle of the month, “the boss has told us to push out more cars or we’ll never reach the target this month”. The most common, however, is the end of the month trick.
Here’s the problem: Dealerships DO have targets and they WILL offer extra discounts to meet them when they need to. But - as most buyers are only in the market every few years, and do not have any trustworthy dealership contacts, it is impossible to know whether any given dealer is genuinely under pressure, or just telling fibs to try and get the sale.
(This is where using CarBroker.com.au is useful too, as we always know which dealers are doing it tough, and we “help” them reach their targets by selling cars very cheaply.)
Puppy Dogging - By allowing a customer to take a car home overnight or to work for a day, the sales person is trying to get him/her to “fall in love with the car”. Not very underhanded, perhaps, but considering the dealer will initiate this in some cases by asking for a “trade-in assessment”, you need to recognise it’s definitely a trick. A trade in assessment should take about 10 minutes. A half hour at most.
Cheap Finance - A dealer may tell you he’s reached the “limit” as to what he can do with the price, but he can give you a “special deal” on the finance. He will tell you the normal rate is x% and then say: “…but you can have it for y%” (slightly less). Unless you’re aware of current interest rates, you can easily pay too high a rate.
Repayment Quotes - A small increase in the repayments will equal a large increase in the total amount the customer pays for the new car. Dealers use this to great advantage in order to divert focus from the total price paid.
Sucking Back - Also known as “ankle tapping”. This is when the dealer offers you less than market value for your trade in. The idea is to conceal a profit from the customer by lowering the allowance for the trade in. If it succeeds, the dealer can offer the customer an unrealistically low price for the new car.
Limited Time - Extremely common trick. If the dealer does give a price, he will try to make the customer believe that it is only valid right now. An obvious ploy to force the customer to make up his/her mind on the spot. The amazing thing is the number of customers that fall for it.
Stalling - There are various methods of stalling. The purpose of the stalling trick is to tire out the customer, and to reduce the time available to him to shop around for a better price. Some common stalling tricks are:
• Misplace the keys to the trade in.
• Block the customers car.
• Taking excessive time to assess the trade in. There is always a valuer on site at a dealership, and a valuation takes no more than 15 minutes.
Hot Property - Amazingly, no matter what car the customer wants, it’s always “very sought after” and/or “hard to find”.
My Wife Drives One - A classic trick designed to make the customer think the car is “so good that my wife even drives one”. If it happens that she really does, then it’s because her husband works at the dealership and gets it as part of his salary package.
Making Friends - A good sales person will search hard to find common interests with the customer. The purpose of this is to make the customer identify with the sales person. This, in turn, leads to the customer feeling bad if he/she lets down the sales person by not buying from him. Failing to buy from your “friend” also sets you up for a greater chance of a “spraying”.
Throwing in Extras - Offering “extras” such as carpet mats, window tinting, and other items serves two purposes:
• It draws a line that makes the customer believe that the dollar amount is not further negotiable. If, for example, the bottom line on the car is $30,000, the dealer may stop at $35,000 and start adding “extras”. The extras may only add up to less than $500 by the time the dealer has managed to convince the customer that negotiations are finished.
• It slows down negotiations, and diverts focus from the dollar amount.
Paint Protection - Read more about paint protection here. Most people who have bought a new car will have heard the following line from the aftermarket lady: “Paint protection can only be applied before the car is delivered”. Makes no sense at all., and is not true.
Referred by Friend - Being referred by a friend means the customer is more likely to trust the sales person. Trust is money. The more trust given, the more the customer will pay for the car.
The Woody - Also known as a wood duck. This is a person who walks in and, putting total trust in the sales person, believes the sales person is actually helping to get the best deal for the customer. It’s a salesmans’ dream because full retail price will be paid.
Note: Not every car dealer uses the tactics described above. There are several that are upfront and honest.
I went to purchase a vehicle at a dealership in Michigan, and my father, who lives in Alabama agreed to be a “co-signer” on the vehicle, because my credit score was not sufficient to grant financing. However, on the retail finance agreement, my father is listed as the buyer and i’m listed as the “co-buyer.”
Further, the salesperson had my dad on the phone and asked for his explicit permission to be the “co-signer” on the vehicle, and gave permission for my mom to sign his name. My father agreed, believing that he was the “co-signer” and I was the buyer.
Further, on the application for the title, only MY name is listed in the field where it states “please list all owners and lesees.” The field for an additional person, where my dad’s name should have been, was not there.
The retail buyer’s order lists only my father’s name as the purchaser of the vehicle. However, both my father’s signature and my signature are on the bottom line.
Is this fraud?
In general terms your contract is binding per what’s in the documents you signed. Beyond that everything else will be difficult to prove because it is not that the signatures were faked but that you signed something different from what you were told. Since your out of state I advise you to try and locate a dealer fraud attorney in your state to discuss specific legal remedies available to you in your state. Hopefully he or she can get this matter resolved for you. Keep us posted on here if you get any results. Good luck.
Yesterday I went in to purchase a new honda crv 2009 model. I agreed on a price with the first salesperson, after the manager came out and insulted me by saying..”let me run some numbers by you because maybe you don’t understand the numbers”. I said, “no, I understand the numbers”. I had an offer sheet in place and then went into another office with the Finance manager. I had already received financing for part of the purchase from my bank and didn’t need to sign their financing agreement. That sounded a little shady to me, but I agreed as I had been there three hours by that point. He tried selling me extras and add-ons, which I declined. Then he reprinted the agreement, but the accessories that we agreed upon were not on the document. I was concerned and asked why…he said “that is between you and the salesperson. I have nothing to do with that.” Again, very tired at that point and did not press the issue other than asking, “will the accessories be included when we pick up the car?” He gave a verbal “yes”. After signing the paperwork I raised my concern with the salesperson and he said, “I will make sure that the accessories will be included, you have my word.” So I left. Now it is a Sunday and I need to decide if I should drive down there tomorrow and make sure the accessories are included before I give my final payment. Any thoughts?
Thank you for your post on my blog.
First off - if you are in CA and have not picked up the new vehicle simply tell them that you no longer wish to buy the vehicle! If you have NOT taken possession then you can walk away from the deal. Of course you can go in to see if the vehicle has the requested options but I am sure it does not. If you do take possession then it will be your word against theirs and it will be an upheal battle. Good luck. Give me a call if you have questions. If the matter gets resolved please let us know by posting the outcome on our blog.
- Hovanes Margarian, attorney at law
Melbourne,fl chevy dealer sold me what was suposed to be a 2004 chevy silverodo z71 4X4 with 24,000 miles, our agreed price was 23,000 dollars.I just discovered that the year of the of the truck is 2003 all the paperwork is showing 2004 the numiclachter plate on door is marked 2003 and the tail light is also showing the vehicle to be a 2003.
I thought that I was buyiiing a 2004 I feel that I have been misled by the Melbourne, fl chevy dealer located on us hwy 1 melbourne,fl
If I have any recourse please post.
What you described to me sounds like a straight forward fraud case. At best for the dealership it is a mutual mistake if the dealership claims they made a mistake - in that case the deal still gets undone because of the mutual mistake. Note that these are my general thoughts only and I cannot give you legal advise since you are in FL. But you should contact a local attorney and he/she should be able to handle your case with ease. Thank you for the posting.
- Hovanes Margarian
I recently purchased a used Mercedes from a dealer in Chesapeake, VA. The dealer did not get my plates within the 30 days of my temp tags. In Virginia the DMV will not allow a dealer to give temp tags over 30 days. I have tried to contact the dealer to determine when I will get plates. I keep getting the run-around from them. I’ve contacted DMV who called the dealer and was told they didn’t have the title yet. DMV is sending the information to their law enforcement division to check into. In the meantime I don’t have tags for my new car and my bank will convert my loan to a signature loan if they don’t receive the title within 90 days from the dealer. What repercussions do I have? There has to be some type of criminal law this dealer is breaking. The dealer also owed me 500.00 back from an overpayment and gave me a check which bounced for insufficient funds. I am currently pursuing charges for fraudulent check for that incident.
Thank You.
Unfortunately we are not licensed to advise in VA. It does appear that your right have been violated. Please locate a local attorney to assist you. Thank you.
I just purchased a new car. Now that I’m at home with my calculator I am seeing that my monthly payment is way higher than it should be. For the price of the car with intrest rate, plus tax, license and reg., warranty, theft insurance and minus my trade in, my monthly payment should be about $100 cheaper than what it is. I’ve been reading about “repayment quotes” and I’m wondering if, a.) that is what I’m dealing with, and b.) is it illegal?
When I was at the dealership they showed me the paperwork that shows everything I payed for and the monthly payment that that adds up to. Was it my responsibilty to “check their math” even though the computer did all the calculations? I’m very concerned right now. I feel like I was reallly taken advantage of. I’m in CA so I know I can’t take the car back. Can I go back to the dealership and have then lower my monthly payments to the correct amount? PLEASE HELP!!!!
Thank you for the posting. If your payments really do not add up then you do have a right to make them re-do the contract. You might want to double check by using an online payment calculator to make sure you are including the interest charges accurately. But if not then give us a call and we can make the dealership correct their intentional or negligent error. Our number is 818.990.0418. Thank you.
The outside purchase of my vehicle fell-through, which hampered progress in my vehicle search. I typically sell my existing vehicle prior to subsequent purchase.
After the buyer for my car couldn’t get affordable financing, I went by a dealership after work last week, for their valuation of my car as a trade-in. The trade-in offer received from the dealership was absurdly low, as a CarMax appraisal done a few months prior was several thousand dollars more. At that time, I got up to leave.
The salesman hurried over to the appraiser, who raised his offer by $2,500.00. This new amount ($10,500.00) was still substantially less than the previous appraisal, or what I felt reasonable. I let both gentlemen know of CarMax’s previous offer, and continued for the door.
After declining, the appraiser suggested I go get another CarMax appraisal. He could then administer some, “tricks with the numbers.”
All I needed to do was:
Sell my car to CarMax.
Then, I write CarMax a check for the difference between appraisal/loan payoff.
Finally, I return to the dealership, and they would write me a check to keep my account from bouncing.
By obligating myself in such a way:
I would be at the mercy of the dealership to actually refund my bank account, before the check written to CarMax bounced.
If the dealership did not cover my check written at CarMax, I would be charged with Fraud.
Before covering my banking over-expenditure, the dealership would certainly wait until I had bought a new Subaru from them. This race to keep my checking account afloat and avoid legal prosecution, could potentially be leverage used against me, in my new car deal with Gillman Subaru North.
Regardless whether this suggestion was in good faith or otherwise, I would be at the mercy of the dealership, on a new car deal, “or else…”
Monetary shell games, financial “tricks,” or other potentially fraudulent activities are definitely NOT part of my equation when considering anything, including new car purchases; therefore, felt it was in my best interest to politely agree with their suggestion so that I may exit, and cease communication with the dealership at that time.
This is exactly why I try to sell my car prior to subsequent purchase, as opposed to trading-in a vehicle.
What, if anything should/could I do if confronted with this kind of tactic again in the future? I sent the Chief Executive Officer of the auto group an email detailing this very transaction, in hopes they will cease this practice and/or be willing to properly negotiate.
Thank you for your comment. You definitely made the right decision. There is not much else you can do when faced with a similar situation. I do recommend selling your vehicle to a private party on your own to ensure getting the most for it. Best of luck.
A dealer sold a 2008 Cadillac to an buyer with whom my father has no relationship, but the buyer fraudently said that he was related to my father in order to get a employee car discount. The buyer somehow got a hold of my father’s employment information to buy the car under his (buyer’s) own name. My father has since received a letter from his employer stating that since someone had purchased a car using his employee discount and that my father is now no longer eligible to receive his employment benefits. My father went to the dealership to notify the salesperson that a car was purchased through false misrepresentation. The dealership refuses to provide any information to help my father track down the buyer to press charges.
Can’t the dealership be held liable as well? Aren’t dealerships required to verify information before issuing a employee discount to someone who just walks off the street and says they are related to my father without any verification? Also, is there any clause in car contracts that typically allow for this car purchase to become null/void?
Also, what, if any, kind of charges can be issued against the dealership? Thanks in advance.