8 ms·

No handshakes. A bad economy. These car salesmen shifted tactics– and succeeded

40 points by adam 6y ago

ww520 6y ago
Car salesmen might have carved for the personal connection and face to face deals, customers dread it. It's much better to have a impersonal buying experience over phone and internet. No wonder dealerships adapted to the new approach thrive.
asldkjaslkdj 6y ago
While it's a terrible situation, it is endearing to see people think on their feet during the pandemic. It would be nice to see some of these methods spread and stick around. It's nothing personal but I loathe negotiating and dealing with car salesmen in the traditional process. I want people to get paid fairly without feeling like I'm being taken advantage of.
- ericmcer 6y ago
  I just bought a car and at a certain point during the negotiation I was like... this is weird, subaru is gonna sell thousands of 2020 outbacks, why is there not just a set advertised price.
  - gamegoblin 6y ago
    In most of the US, car manufacturers cannot sell directly to consumers, and by law must sell through dealers. Some companies, most notably Tesla, have come under fire in various states for selling directly: https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes
    - jimmyswimmy 6y ago
      I agree that is how it works presently in the US. Nonetheless, parent's comment is interesting to consider. Why is it that way? Why don't Subaru etc just set a price, you buy the car, and be done with it? The answer is either that it works better or that it's too hard to change. The latter explanation seems facile; with so much money, people and tech involved, it seems likely that the status quo would have already changed to having fixed prices. Years ago, Saturn dealerships sold new cars at a fixed price. No negotiations. I considered one and rejected it as the price seemed too high. Didn't even talk to a sales rep. The current car sales regime nearly forces me to talk to somebody, and then they can hound me until I buy or they give up. It might be possible for car manufacturers to motivate sales through some other means, but apparently this way works, no matter how sucky it is.
      - pandaman 6y ago
        Car prices are the same as any other consumer goods prices: there is a MSRP and, unless it's some rare, high demand model, you can always buy at the MSRP. Unlike other consumer goods, though, it is worth haggling because the retail markup is in range of several thousand dollars and the dealer is interested in your business (maintenance, warranty repairs) enough to forfeit a part or the whole markup. Depending on the incentives, a dealer might be even considering selling under the invoice price. Also there are other components of the deal, not happening often with other goods: trade-in and financing. You cannot put a fixed price on those. But if you really don't care and want to buy a car for cash at MSRP you can do it with little to no hassle.
      - fountainofage 6y ago
        It really is that car dealerships are very wealthy and have a lot of political clout. There were also early rulings that a manufacturer can't order a car dealership how to operate - the basics of the case were that American manufacturers were lending or outright granting money for people to start dealerships. Those dealerships started trying to sell foreign cars, the manufacturers said "no way", the dealerships fought back, and the dealerships won. Basically it's become a textbook example of the entrenched parties setting up barriers to entry. They have lots of money, and are often active in their local communities, so people generally like them. Edit: basically, I'm saying it really is too hard to change because the law is on the dealerships side, and there's a lot of momentum and status quo to overcome.
        defen 6y ago
        It's a nice cozy relationship. Many car dealership franchises are basically state-granted hereditary monopolies that print money, so of course they are going to put some of that money back into the community (and local/state politicians pockets) to maintain that. It's good for the politicians because they actually have some leverage over dealers, as opposed to a behemoth like Toyota or Volkswagen.
        cattlefarmer 6y ago
        I don't mean this as a joke, but I thought people generally hated car salesmen? Here in Japan, the manufacturers do actually set a recommended retail price that is slightly higher that what dealers often sell at. Example using the Subaru Outback mentioned up top, shows three available grades sold starting at 3,410,000yen. Roughly us$30k. https://members.subaru.jp/estimate_simulation/index.html?carm=legacy_obk&btc=BW0G01&tcode=BS9G5LC&mop=ABC&ext=1U&int=20 https://members.subaru.jp/estimate_simulation/index.html?car...
  - deleted 6y ago
    [deleted]
  - Noumenon72 6y ago
    There is a set advertised price, at CarMax. I always go there. But the negotiation allows more information to pass through the transaction. Is the dealer eager to sell because this car has been sitting on the lot (they overestimated its value)? Is the buyer eager to buy because they hate comparison shopping? This way the comparison shoppers and splurgers both end up paying close to what the car is worth to them, rather than being charged some average price that leads to fewer sales to the shoppers and less profit from the splurgers.
  - Cactus2018 6y ago
    This American Life had a great episode called "129 Cars" about the overall dealership phenomenon. > We spend a month at a Jeep dealership on Long Island as they try to make their monthly sales goal: 129 cars. If they make it, they'll get a huge bonus from the manufacturer, possibly as high as $85,000 — enough to put them in the black for the month. If they don't make it, it'll be the second month in a row. So they pull out all the stops. https://www.thisamericanlife.org/513/129-cars https://www.thisamericanlife.org/513/129-cars
  - kasey_junk 6y ago
    Not to mention zero % financing. Watching a poor car salesman try to work his 4 square when his easiest variable is set was amusing. “How much would you be willing to finance?” “At this rate? 100x the price of the car.”
- golover721 6y ago
  I actually find with all the information that is available to consumers these days through various websites and forums that it is very easy to take advantage of the current system in your favor. It’s important to remember with new cars there are a number of ways the dealership gets paid not just what they the sales price is for a car. There are holdbacks from the manufacturer where they pay a certain amount per car sold. The amount often goes up based on hitting some sales goal for the month. On top of that there are other manufacturer incentives once again usually based on a specific sales goal whether on a particular model or just overall. Not to mention the profit on any trade in. If often makes sense for the dealer to sell an individual car at a loss to help them make these goals.
deleted 6y ago
[deleted]
krackers 6y ago
So what exactly is the new tactic? I scoured the article but they never seemed to explain what the new tactic is, other than the phrase "working deals over Zoom and text messages."
- gwbas1c 6y ago
  There's no new tatic, it's just adjusting to a different communication style. What boggles me is the lady who drove the Lincoln and tried the Wrangler. The salesman should have suggested a different vehicle.
  - ggm 6y ago
    She wasn't ready but is looking to change carstyle. I think she'll have come back, if he gave her a hassle free non sexist chance to enjoy the Jeep. Telling a customer what she wants is a good way to make her walk, my partner does, every single time.
    - gwbas1c 6y ago
      The Wrangler drives very differently than a Lincoln. They look awesome, but they are the polar opposite of a luxury vehicle. Heavy, slow, loud, limited towing, "outdated" manual transfer case... Makes sense for going off-road, or for customizing, but not as a luxury SUV. (And my wife talked me out of one twice! ) The other Jeeps are just cheap crossovers. I found a perfect 4-door, 10-year-old Wrangler to buy while I waited for my Tesla, and then keep to take on the beach, but my wife decided she wanted a minivan instead.
pbourke 6y ago
It was not mentioned in the article, but it seems like there’s also lower inventory on car lots due to the slowdowns and closures of auto plants in the spring.
- galkk 6y ago
  Barely. The demand also went down, and thousands cars are stuck in ports [1] and even on ships [2], [1] https://driving.ca/nissan/auto-news/news/suvs-on-cargo-ships-stuck-in-the-ocean-as-u-s-ports-crowded-with-unsold-cars https://driving.ca/nissan/auto-news/news/suvs-on-cargo-ships... [2] https://www.google.com/search?client=firefox-b-1-d&q=cars+stuck+ports https://www.google.com/search?client=firefox-b-1-d&q=cars+st...
  - pbourke 6y ago
    That was true a few months ago, but things have changed. Many North American factories closed down or curtailed production in the March-April-May timeframe. There was a rebound in demand as spring turned into summer (which was a major point in the article), but the supply chain to deliver the vehicles to meet that demand had stalled. "growth in supply has yet to catch up to demand" (11 Aug) https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/tight-us-auto-inventory-likely-to-hit-already-depressed-car-sales-experts-say-59776691 https://www.spglobal.com/marketintelligence/en/news-insights... "Auto dealers in states with new virus outbreaks have a bigger problem: low inventory" (20 July) https://www.detroitnews.com/story/business/autos/2020/07/20/covid-hotspots-auto-dealers-low-inventory/5446996002/ https://www.detroitnews.com/story/business/autos/2020/07/20/... "The car shortage is a big story. Between people moving to the suburbs and avoiding public transportation (so they need cars) and the factories having shut down or slowed down due to COVID, we're running out of available cars." (5 Aug) https://twitter.com/TheStalwart/status/1291110174879514628 https://twitter.com/TheStalwart/status/1291110174879514628
Trias11 6y ago
I tried to buy a new car and ended up not buying anything due to stubbornness of salesmen. I couldn’t care less about personal interaction with sleazy salesman and when buying new car I just need the right price, not the sales dance done in person and all this “let me talk to the manager” BS. When salesman quotes me MSRP on my answer on the best deal - this is conversation over. When they stop treating customers like idiots they’ll get more business and more sales.
- ryanmccullagh 6y ago
  I think your approach is off. If you're serious about buying, you should state your price, and ask if they accept. Not play hardball and ask them to come up with a number. I bought my last new car with price negotiated on the phone before even showing up at the dealer. The hardball approach never worked for me. It's best to just know your max OTD (Out the door with taxes and fees) price and offer that.
  - Trias11 6y ago
    Agree with OTD approach. Helps to prevent fraud with "document" fees BS or whatever they'll use to sneak in extra $100's and $1000's.
- McKayDavis 6y ago
  If you have a Costco membership, I highly recommend you contact the Costco Auto program [1]. They pre-negotiate a discounted price with nearby dealer on your behalf. [1] https://www.costcoauto.com https://www.costcoauto.com
  - pbourke 6y ago
    If you work for a large company, or one that is a supplier to automakers, I highly recommend researching whether your company is part of the make’s corporate discount program. The prices are often in the neighborhood of employee pricing, and often publicly-advertised incentives will stack with the corporate discount.
  - 6y ago
ggm 6y ago
Two cars in a row on the line are not identical. Options and finish and engine and suspension and extra and milage and maintenance history and colour and metallic or plain.. the idea a car purchase is cookie cutter is probably as flawed as the idea all ThinkPad are the same.
- alexbanks 6y ago
  Weird how customers are able to compare models and purchase in almost all other walks of life
  - pbourke 6y ago
    I’m buying my first pickup. These are not cookie-cutter vehicles. The MSRP is a floor for sticker prices. Once you factor in trim levels, packages, engine choices, etc there’s a continuous gradient that runs from MSRP to 2x MSRP or more. When you have specific capacities for towing and payload that you’re after, plus some other options, it gets complex. The manufacturer’s site did not allow faceted search at the level that I wanted, so I wrote software to scrape the inventory, parse the option codes and stick the results in a Sqlite file so I could track inventory in the region.
    - alexbanks 6y ago
      My point is not that it's easy, or that having a guide is unhelpful. My point is that the pretend song-and-dance of current car buying is ridiculous and anti-consumer. And lots of people don't have complex requirements for their vehicles. Size, color, type etc. Which could probably literally be managed via an Amazon-style listing.
9nGQluzmnq3M 6y ago
No HN thread on car sales would be complete without a mention of this classic: http://www.dougsrepublic.com/PDF/carsalesman.pdf http://www.dougsrepublic.com/PDF/carsalesman.pdf (I'd link to the original on Edmunds.com, but it seems to be hopelessly borked with 404s all over the place.)

40 points by adam 6y ago

Car salesmen might have carved for the personal connection and face to face deals, customers dread it. It's much better to have a impersonal buying experience over phone and internet. No wonder dealerships adapted to the new approach thrive.

asldkjaslkdj 6y ago

While it's a terrible situation, it is endearing to see people think on their feet during the pandemic. It would be nice to see some of these methods spread and stick around. It's nothing personal but I loathe negotiating and dealing with car salesmen in the traditional process. I want people to get paid fairly without feeling like I'm being taken advantage of.

ericmcer 6y ago
I just bought a car and at a certain point during the negotiation I was like... this is weird, subaru is gonna sell thousands of 2020 outbacks, why is there not just a set advertised price.
- gamegoblin 6y ago
  In most of the US, car manufacturers cannot sell directly to consumers, and by law must sell through dealers. Some companies, most notably Tesla, have come under fire in various states for selling directly: https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes
  - jimmyswimmy 6y ago
    I agree that is how it works presently in the US. Nonetheless, parent's comment is interesting to consider. Why is it that way? Why don't Subaru etc just set a price, you buy the car, and be done with it? The answer is either that it works better or that it's too hard to change. The latter explanation seems facile; with so much money, people and tech involved, it seems likely that the status quo would have already changed to having fixed prices. Years ago, Saturn dealerships sold new cars at a fixed price. No negotiations. I considered one and rejected it as the price seemed too high. Didn't even talk to a sales rep. The current car sales regime nearly forces me to talk to somebody, and then they can hound me until I buy or they give up. It might be possible for car manufacturers to motivate sales through some other means, but apparently this way works, no matter how sucky it is.
    - pandaman 6y ago
      Car prices are the same as any other consumer goods prices: there is a MSRP and, unless it's some rare, high demand model, you can always buy at the MSRP. Unlike other consumer goods, though, it is worth haggling because the retail markup is in range of several thousand dollars and the dealer is interested in your business (maintenance, warranty repairs) enough to forfeit a part or the whole markup. Depending on the incentives, a dealer might be even considering selling under the invoice price. Also there are other components of the deal, not happening often with other goods: trade-in and financing. You cannot put a fixed price on those. But if you really don't care and want to buy a car for cash at MSRP you can do it with little to no hassle.
    - fountainofage 6y ago
      It really is that car dealerships are very wealthy and have a lot of political clout. There were also early rulings that a manufacturer can't order a car dealership how to operate - the basics of the case were that American manufacturers were lending or outright granting money for people to start dealerships. Those dealerships started trying to sell foreign cars, the manufacturers said "no way", the dealerships fought back, and the dealerships won. Basically it's become a textbook example of the entrenched parties setting up barriers to entry. They have lots of money, and are often active in their local communities, so people generally like them. Edit: basically, I'm saying it really is too hard to change because the law is on the dealerships side, and there's a lot of momentum and status quo to overcome.
      - defen 6y ago
        It's a nice cozy relationship. Many car dealership franchises are basically state-granted hereditary monopolies that print money, so of course they are going to put some of that money back into the community (and local/state politicians pockets) to maintain that. It's good for the politicians because they actually have some leverage over dealers, as opposed to a behemoth like Toyota or Volkswagen.
      - cattlefarmer 6y ago
        I don't mean this as a joke, but I thought people generally hated car salesmen? Here in Japan, the manufacturers do actually set a recommended retail price that is slightly higher that what dealers often sell at. Example using the Subaru Outback mentioned up top, shows three available grades sold starting at 3,410,000yen. Roughly us$30k. https://members.subaru.jp/estimate_simulation/index.html?carm=legacy_obk&btc=BW0G01&tcode=BS9G5LC&mop=ABC&ext=1U&int=20 https://members.subaru.jp/estimate_simulation/index.html?car...
- deleted 6y ago
  [deleted]
- Noumenon72 6y ago
  There is a set advertised price, at CarMax. I always go there. But the negotiation allows more information to pass through the transaction. Is the dealer eager to sell because this car has been sitting on the lot (they overestimated its value)? Is the buyer eager to buy because they hate comparison shopping? This way the comparison shoppers and splurgers both end up paying close to what the car is worth to them, rather than being charged some average price that leads to fewer sales to the shoppers and less profit from the splurgers.
- Cactus2018 6y ago
  This American Life had a great episode called "129 Cars" about the overall dealership phenomenon. > We spend a month at a Jeep dealership on Long Island as they try to make their monthly sales goal: 129 cars. If they make it, they'll get a huge bonus from the manufacturer, possibly as high as $85,000 — enough to put them in the black for the month. If they don't make it, it'll be the second month in a row. So they pull out all the stops. https://www.thisamericanlife.org/513/129-cars https://www.thisamericanlife.org/513/129-cars
- kasey_junk 6y ago
  Not to mention zero % financing. Watching a poor car salesman try to work his 4 square when his easiest variable is set was amusing. “How much would you be willing to finance?” “At this rate? 100x the price of the car.”
golover721 6y ago
I actually find with all the information that is available to consumers these days through various websites and forums that it is very easy to take advantage of the current system in your favor. It’s important to remember with new cars there are a number of ways the dealership gets paid not just what they the sales price is for a car. There are holdbacks from the manufacturer where they pay a certain amount per car sold. The amount often goes up based on hitting some sales goal for the month. On top of that there are other manufacturer incentives once again usually based on a specific sales goal whether on a particular model or just overall. Not to mention the profit on any trade in. If often makes sense for the dealer to sell an individual car at a loss to help them make these goals.

deleted 6y ago

[deleted]

krackers 6y ago

So what exactly is the new tactic? I scoured the article but they never seemed to explain what the new tactic is, other than the phrase "working deals over Zoom and text messages."

gwbas1c 6y ago
There's no new tatic, it's just adjusting to a different communication style. What boggles me is the lady who drove the Lincoln and tried the Wrangler. The salesman should have suggested a different vehicle.
- ggm 6y ago
  She wasn't ready but is looking to change carstyle. I think she'll have come back, if he gave her a hassle free non sexist chance to enjoy the Jeep. Telling a customer what she wants is a good way to make her walk, my partner does, every single time.
  - gwbas1c 6y ago
    The Wrangler drives very differently than a Lincoln. They look awesome, but they are the polar opposite of a luxury vehicle. Heavy, slow, loud, limited towing, "outdated" manual transfer case... Makes sense for going off-road, or for customizing, but not as a luxury SUV. (And my wife talked me out of one twice! ) The other Jeeps are just cheap crossovers. I found a perfect 4-door, 10-year-old Wrangler to buy while I waited for my Tesla, and then keep to take on the beach, but my wife decided she wanted a minivan instead.

pbourke 6y ago

It was not mentioned in the article, but it seems like there’s also lower inventory on car lots due to the slowdowns and closures of auto plants in the spring.

galkk 6y ago
Barely. The demand also went down, and thousands cars are stuck in ports [1] and even on ships [2], [1] https://driving.ca/nissan/auto-news/news/suvs-on-cargo-ships-stuck-in-the-ocean-as-u-s-ports-crowded-with-unsold-cars https://driving.ca/nissan/auto-news/news/suvs-on-cargo-ships... [2] https://www.google.com/search?client=firefox-b-1-d&q=cars+stuck+ports https://www.google.com/search?client=firefox-b-1-d&q=cars+st...
- pbourke 6y ago
  That was true a few months ago, but things have changed. Many North American factories closed down or curtailed production in the March-April-May timeframe. There was a rebound in demand as spring turned into summer (which was a major point in the article), but the supply chain to deliver the vehicles to meet that demand had stalled. "growth in supply has yet to catch up to demand" (11 Aug) https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/tight-us-auto-inventory-likely-to-hit-already-depressed-car-sales-experts-say-59776691 https://www.spglobal.com/marketintelligence/en/news-insights... "Auto dealers in states with new virus outbreaks have a bigger problem: low inventory" (20 July) https://www.detroitnews.com/story/business/autos/2020/07/20/covid-hotspots-auto-dealers-low-inventory/5446996002/ https://www.detroitnews.com/story/business/autos/2020/07/20/... "The car shortage is a big story. Between people moving to the suburbs and avoiding public transportation (so they need cars) and the factories having shut down or slowed down due to COVID, we're running out of available cars." (5 Aug) https://twitter.com/TheStalwart/status/1291110174879514628 https://twitter.com/TheStalwart/status/1291110174879514628

Trias11 6y ago

I tried to buy a new car and ended up not buying anything due to stubbornness of salesmen. I couldn’t care less about personal interaction with sleazy salesman and when buying new car I just need the right price, not the sales dance done in person and all this “let me talk to the manager” BS. When salesman quotes me MSRP on my answer on the best deal - this is conversation over. When they stop treating customers like idiots they’ll get more business and more sales.

ryanmccullagh 6y ago
I think your approach is off. If you're serious about buying, you should state your price, and ask if they accept. Not play hardball and ask them to come up with a number. I bought my last new car with price negotiated on the phone before even showing up at the dealer. The hardball approach never worked for me. It's best to just know your max OTD (Out the door with taxes and fees) price and offer that.
- Trias11 6y ago
  Agree with OTD approach. Helps to prevent fraud with "document" fees BS or whatever they'll use to sneak in extra $100's and $1000's.
McKayDavis 6y ago
If you have a Costco membership, I highly recommend you contact the Costco Auto program [1]. They pre-negotiate a discounted price with nearby dealer on your behalf. [1] https://www.costcoauto.com https://www.costcoauto.com
- pbourke 6y ago
  If you work for a large company, or one that is a supplier to automakers, I highly recommend researching whether your company is part of the make’s corporate discount program. The prices are often in the neighborhood of employee pricing, and often publicly-advertised incentives will stack with the corporate discount.
- 6y ago

ggm 6y ago

Two cars in a row on the line are not identical. Options and finish and engine and suspension and extra and milage and maintenance history and colour and metallic or plain.. the idea a car purchase is cookie cutter is probably as flawed as the idea all ThinkPad are the same.

alexbanks 6y ago
Weird how customers are able to compare models and purchase in almost all other walks of life
- pbourke 6y ago
  I’m buying my first pickup. These are not cookie-cutter vehicles. The MSRP is a floor for sticker prices. Once you factor in trim levels, packages, engine choices, etc there’s a continuous gradient that runs from MSRP to 2x MSRP or more. When you have specific capacities for towing and payload that you’re after, plus some other options, it gets complex. The manufacturer’s site did not allow faceted search at the level that I wanted, so I wrote software to scrape the inventory, parse the option codes and stick the results in a Sqlite file so I could track inventory in the region.
  - alexbanks 6y ago
    My point is not that it's easy, or that having a guide is unhelpful. My point is that the pretend song-and-dance of current car buying is ridiculous and anti-consumer. And lots of people don't have complex requirements for their vehicles. Size, color, type etc. Which could probably literally be managed via an Amazon-style listing.

9nGQluzmnq3M 6y ago

No HN thread on car sales would be complete without a mention of this classic: http://www.dougsrepublic.com/PDF/carsalesman.pdf http://www.dougsrepublic.com/PDF/carsalesman.pdf (I'd link to the original on Edmunds.com, but it seems to be hopelessly borked with 404s all over the place.)