Automotive News came out with an article talking how dealers already under FTC watch, had consumer complaints of bait-and-switch behavior.  These dealers had twice the complaints for not disclosing fees and other charges.  These dealers account for only a small percentage of stores across the country.  Colorado has laws in place to protect consumers from these kinds of tactics, but at the end of the day, this behavior is part of the dealership way.

 

I got to thinking about my decade long career in the dealership world, and reflecting about the culture of stores.

 

When I first began to sell cars, I was told to watch movie clips of Boiler Room in the conference room, and Glengarry Glen Ross at the office when Blake introduces himself.  These scenes were to convey to a newbie like myself how to close car deals.  Terms like ABC, get a customer to just   say yes, the first person to speak loses, etc…  All these old sales techniques was how the car dealerships operated and thrived.  As I got older, these scenes didn’t make sense to me.  In Boiler Room, they got busted for cheating clients out of money.  If lying your ass off to sell something and make a ton of money is your goal, then watch Boiler Room.

 

Glengarry Glen Ross shows the competitive, dog eat dog of sales.  Some of the top guys were at the top because of their relentless effort to make a sale.  They worked all the time, were slick talkers, sold a ton of cars, and made big money.

 

To counter this imbalance, third party sites began to help consumers with more information on car values, car history, and lenders were providing rates.  Laws were passed to protect consumers from false advertising and other scandalous behavior.  Dealers lost their upper hand.  As technology has become ingrained in our culture, dealers have somewhat adapted.

 

When I was with AutoNation, we all went to training for the new “Express Lane”.  The idea was customers could put a deposit down to reserve a car, get approved, have paperwork printed and ready, and come in the store to sign and take delivery.  It's a process that I wished for, for years.  How happy would people be to have a streamlined buying process where they spend as little time in the dealership as possible?  Stores fought this change, more like the managers and the finance department.  The Express Lane idea died in like 6 months.

 

I’ve been out of the dealership world for 6 years now, but I’m around it being an auto broker.  It hasn’t changed much from when I first started, and I don’t think it will ever change.  I have noticed customer interaction is becoming more mobile and not in person.  The whole song and dance show is still the same.  Dealers want you to come in to test drive and start to negotiate numbers.  You end up spending half your day at the store buying a car.  The process is designed to keep you there, wear you down, and maximize profit.

 

I do believe test driving is important.  A consumer needs to feel how the seat is to their body, the size of the car fits their lifestyle, performance is acceptable, and that it has the features you want.  This checklist builds value to the consumer, which means they are more inclined to spend the necessary money, or even more.  A Toyota might have the features I like, but I’d never buy one.  I see more value in other cars and would spend more money to get an engine I like.

 

Understand, most of the people at dealerships are good people.  They are in a profession that is competitive, pay is based on sales and survey scores.  It’s not for the faint of heart.  I’ve heard people complain about how crappy their office is, how their boss sucks, and so on.  Imagine not getting a paycheck on top of all those things.  My worst month was a November when I sold 3 cars for the month.  I was beyond stressed, my morale was cracked.  I remember thinking why the heck I was doing this.  The reality is, a company like AutoNation, with so many stores across the country and adding more, and sponsoring an Indy car, can change pay plans for their employees.  I remember every couple of years, AutoNation would change targeted goals that you had to reach for pay, and those goals went up.  This wasn’t just for the sales department, our service department was affected too.  Guys were capped on their potential income so the company could make more.  AutoNation offered sales associates to be on an hourly pay plan and get an additional flat for units sold.  Eventually, they took that away after a couple of years.  I was on that pay plan when I was coaching.  God forbid employees get paid something for their time and have some stability.

 

For employees to hit these targets, you start seeing added products on cars.  Dealers will add over $1,600 of additional products to a new car so the finance department can hit those target goals to maximize their pay.  Sales associates aren’t making the money they did 12 years ago because new cars are marked down so much.  When I sold GMCs, we negotiated at MSRP not invoice.  The name of the game is sold units because the manufacturer pays the dealer for hitting goals.  Sales managers, finance managers, and sales people are the result of a dealership culture that will not change at its core.  I have my own ideas of how a sales floor should operate and employees get paid, but it’ll never happen.

 

The fact dealers are under FTC scrutiny for bait-and-switch practices, surprises no one.  Consumers want a new way to buy cars, technology is capable of allowing a streamlined process, but dealers will not change.  They want to control the customer the entire way through.  They aren’t worried about upsetting customers because they have a product you want, so what’s one or two dissatisfied people?  Plus, dealers understand their process is so long, and it gets to a point where people just won’t walk away.  A consumer can’t walk away after being somewhere for 4 hours, and leave empty handed.  People turn spiteful in the face of psychological battle of control.  History shows us dealers have been successful at this game, so why would they change?

 

Which leads into the benefits of working with a broker.  The process is so much easier, way more laid back, and way more transparent.  I am able to do things remotely so I’m not wasting your time having you come in for hours.  The overall process is spread over days rather than a day of shopping, and the only negative is my cost.  Dealers own the inventory and can decide if they want to lose money on a car in hopes to make up profit through a trade or financing.  I have a cost to the dealer which is higher than theirs, usually that difference isn’t significant, but it’s still a difference.  I take out the bullshit of up charging for this, hiding this fee, marking up rate for more profit, or trying to up-sell you a different car to increase my pocket book.