It’s no secret that car dealerships have multiple ways to make money. The sales department profits from selling vehicles, while the finance department earns revenue from finance reserves and product sales. Meanwhile, the service department generates income through vehicle repairs, and the parts department profits from selling parts. Even body shops contribute by earning money on vehicle repairs. While these traditional profit centers are clear, what’s less apparent is the increasing number of tools dealerships use to maximize their earnings from customers. As your personal car shopper, we are the antidote to the dealerships’ strategies because we know that dealerships prioritize their profits over professionalism. We are only going to discuss the sales and finance department in this post.
A new salesperson takes sales training from the manufacturer. So at a Ford dealership, the salesperson will take Ford training. Mostly this is product knowledge training with sales strategies mixed in and honestly is good training. Then the dealership will have a formal training program. Back when I first began, it was training from a dude named Grant Cardone. Hours of sales scripts to learn. “If I could, would you?” and “What do I need to do to earn your business today?”. Cringe after cringe after cringe but still pretty solid training. Then the real world training sets in. It happens multiple times a day and is situational. This is where the salesperson really learns the “tricks of the trade” because this training is done by the experienced salespeople. This is the bad training, because the experienced sales people have so many bad habits. They always seem to do the sales tactics that drive you crazy. Each day of this training, the bad habits get embedded deeper and deeper until it’s just the way the person knows how to sell cars. All the manufacturer training and certified sales training (the good training) is pushed out for bad habits. The real problem is that dealerships have been doing business this way for so long, that this is simply THE WAY. It’s simply the way they do business because it is so profitable. They know we don’t like how they do business, but we continue to make them so much money they don’t need to stop. In fact, no dealership wants to stop doing business this way because changing will cost them money. Yeah, changing their business model to being more customer friendly will cost dealerships sales and money.
I worked for a very aggressive dealership group and I ran a Nissan dealership. Across the street from us a Chevy dealership that decided to allow customers to return the car within three days with no questions asked. They stopped doing this after three months because they were losing three sales a week from dealerships who would beat the deal.
The finance department is a different beast. Considered more “professional”, finance managers go to finance school for a week before assuming the job. Finance school is held by the consulting company the dealership uses and is a 40 hour immersion product knowledge and word tracks that really are effective. The school is taught by ex car people who once ran finance departments but were so successful they were offered a job as a trainer. These people wear expensive suits, flash their Rolexes and speak a bit more sophisticated than a typical car dealership employee. Of course, they work for a third party company and they generally teach finance managers how to sell the “package”. “Our dealership has created a package that ensures that your ownership experience is the best possible experience” was the setup for our package. Then the finance manager simply details the benefits of each part of the package. When they leave training that week, they are trained to sell the package in a relatively honorable way. A very effective and honorable way.
Every week, the consulting company has a “trainer” come to the dealership and spend time with each finance manager doing more training. These trainers are ex finance managers who excelled so well the consulting company offered them a job. All of these trainers have a great deal of experience selling finance products.
Remember when I said that the experienced sales person would give bad training advice to the new salesman? Well, the same applies here. Finance products such as extended warranties, key fob replacement, tire and wheel protection along with windshield and paint protection are all needed when “bad things” happen. In other words, you only use the extended warranty when something breaks. You only use the windshield protection when your windshield gets cracked. And so on. The problem is that these finance people stop selling the good of the products and start selling fear. “The average car repair is XYZ dollars. Can you afford to pay XYZ dollars right now?” Or if it’s a family, “don’t you want to know that if the car breaks down, your wife has someone to call and take care of everything?” In other words, these finance managers try to put you into a corner where saying no to them makes you feel guilty.
Here is a fun example and we called it the 99% sale: “Mr. Customer, if your car was 99% perfect, would you be happy with it? Well, 99% perfect means that the car is in the shop 4 days a year. With the average repair being XYZ, that would mean that it will cost you a bunch of money over a 4 year ownership cycle. In fact, it would cost you more money than the price of this extended warranty.” The 99% angle was a very effective closing tool in the finance department.
A note about training expenses. At my dealerships, we spent $1800 in direct expenses training a salesperson. We also spent 3 hours a week of ongoing training. The last time I sent a finance manager to finance school, my total expense was $4800 dollars for the week including per diem, hotel fees and travel expenses. I did finance training for an hour a week plus the training from the consulting company. Essentially, I was spending $500 a week for finance manager training.
The part that should make your head explode is that all of this “professional” training is happening and yet, salespeople are not professional. Either they are lacking in product knowledge or they are not effective communicators or they are using bad tactics or a combination of all three. Frankly, they make it really really really hard to buy a car. Then once you say yes, you go to the finance office where the “professional” uses guilt to make you spend even more money.
It should be a good day to get a new car and instead, you walk out the dealership with the worst taste in your mouth. People telling you over and over again that they want you happy but their actions are definitely not congruent with their words.
I’m supposed to go into our big sales pitch here telling you all the reasons you should allow us to be your personal car shopper. The reality is that I don’t need to give you a big sales pitch because the dealerships continue to do all the selling for us. Our company exists because dealerships prioritize their profits over professionalism. We handle all the car dealership run-around so you don’t have to. We take pride in making the process enjoyable for our clients.
See What Our Customers Are Saying and if you want to learn more, Contact Us Here
