#497 - Confessions of a Car Salesman Part V

Confessions of a Car Salesman Part V

Part 5: A Tale of Two Deals In the new car sales tower there was a huge white board listing the names of all the salespeople on the lot. Every time you sold a car they colored in a blue box next to the name of the salesperson. The best salesman on the lot had a row of 15 boxes stretching out beside his name. I had no boxes next to my name. I felt inadequate.

I had been working for almost a week without selling my first car. I had greeted a lot of customers but I still didn't have a single sale to my name. I gazed jealously at the long rows of boxes next to the names of the other salesmen and wondered when I would make my first sale. Then, one morning, I got a "live one."

I had been standing on the curb out in front of the dealership looking for ups. It was funny because, when you looked away, and then back, customers seemed to magically appear. That's because they sometimes snuck through the bushes. There were hedges bordering the car lot so we couldn't see people approaching from the street. Often, a shopper might be at the dealership next door. They decided to continue shopping by walking down the street. That's why they came through the bushes.

By the time I reached this customer he was already inspecting a top-of-the-line minivan. I introduced myself and he told me his name was Randy Park. He was a young Asian man with grease under his fingernails. Later, he told me he was a mechanic. At first, Mr. Park was very guarded. But as we walked to the back lot to look for more minivans, he relaxed and opened up a bit.

We found two minivans that were very close to what he wanted but he told me that he didn't like the color of the interior. He wanted beige with a beige interior. I told him that we had yet another lot which visitors were not allowed to go to. He could wait in the dealership while I checked inventory. He seemed to know the game, that once inside we would work him to make a deal. Still, reluctantly, he followed me inside and sat down in a sales cubicle. I had my first customer, "in the box."

I took some basic information about him. He wanted to pay cash for the minivan and trade in a 10-year-old Acura with 160,000 miles on it.

Michael, my ASM (assistant sales manager) came in to meet Mr. Park and he began searching the inventory for a minivan to match his tastes. Finally, we located a minivan that matched the description and we went outside to look at it.

"It doesn't have running boards," Mr. Park said.

"We'll put them on," Michael quickly said.

Mr. Park inspected the minivan carefully, but he refused to test-drive it, saying his brother had the same vehicle and he had driven it many times. He also said he wanted a number of things added to the minivan such as the aforementioned running boards, fog lights and a rubber scratch guard for the rear bumper. Michael kept saying it would be no problem to add those things once the deal was set.

At this point things got sticky. Michael had to go into a meeting so another salesman from my team, Juan, was brought in to help me with the deal. I stood to the side in the cubicle and let Juan handle the customer. Just as Michael had described, Juan filled in the four-square worksheet with the stock number of the vehicle and the sticker price, $28,318. Mr. Park saw this and began to get excited, saying he would pay only $24,000 for the minivan. Juan ignored this early overture, picked up the phone and dialed the new car sales tower.

"I have a Mr. Park with me," Juan told the sales manager. "Don't call the police but he's trying to steal our car." (Another example of car salesman "humor.")

Juan gave the desk all the extras that Mr. Park wanted added to the minivan. He then wrote some numbers in the boxes and hung up the phone. He told Mr. Park that we needed a $6,000 down payment and his monthly payments would be $523.

"I told you, I will pay cash for this car," Mr. Park said. "But I want your best price. What is your best price to buy the minivan?"

Juan recalculated the prices and told Mr. Park he could have this beautiful new minivan for only $27,500 plus the cost of the extras. Mr. Park demanded to know how much he would get for his trade-in vehicle. Juan told him we would give him $2,500. This sent Mr. Park into a frenzy. He kept insisting the car was worth at least $6,000.

Juan and Mr. Park went back and forth for about 10 minutes. Then, abruptly, Juan stood up and left. I sat down and tried to make small talk with Mr. Park. This was difficult since I could see that he was upset about the way he was being treated. Juan returned a few minutes later with the four-square sheet on which the sales manager had written, in blue magic marker: "Great deal! $27,150 for our minivan, $2,500 for your trade."

When this was presented to Mr. Park, he became agitated, insisting the trade was worth at least $5,000. Once again, it looked like Juan had gone as far as he could with Mr. Park. He left and came back with a closer who introduced himself as Big Stu. At first, Stu was jovial. He pointed at the list of extras Mr. Park was requesting and asked, "Is there a kitchen sink in here too?" Later, he began referring to the extras as, "Home Depot."

Big Stu was clearly searching for a way — any way — to get a commitment from Mr. Park. At one point he pointed at me and said, "And this guy here has never sold a car before. If you buy this car he gets to pop his cherry."

Unexpectedly, Stu suddenly raised his trade-in value to $4,000. He also said our minivan could sell for $26,500. Mr. Park accepted this offer and initialed the sale sheet. He then said he had to go home and get his wife so he could return and complete the credit application and take delivery of his new vehicle.

I walked Mr. Park out to his car and shook hands with him before he left. I noticed that whenever I shook hands with him he offered me his left hand. All other salesmen he shook hands with right-handed or American-style. I wondered if there was some cultural significance to this. Perhaps he was telling me he trusted me.

Of course, I began thinking that I had made my first sale — or "popped my cherry." Mr. Park's new minivan was still parked in front of the dealership, so I went out to move it back into its space. It turned out the battery was dead. The minivan had been sitting there so long with doors and windows open that it drained the battery. If Mr. Park had insisted on a test drive it wouldn't have started. I went into the tower, and told Big Stu we needed a porter to jump-start the car. He leaned over the counter and screamed in my face, "That's not my f---ing job! Call the porter yourself!"

Eventually, a porter with a "jump box" started the minivan. I let it idle for a half-hour, then put it away. Several hours passed, and I began to feel my first sale slipping away. Suddenly, I was paged. When I got to the receptionist's desk, I found Mr. Park with his wife and baby waiting for me. He looked very excited and happy. Again, he shook hands with me with his left hand. I showed him the minivan and insisted that we take a test drive. When we returned we all went back into a sales cubicle.

Somehow, the earlier sales sheet had gotten "lost" and the numbers they had agreed on were "forgotten." The price of the minivan and all the extras shot back up and the price of his trade-in took a serious dive. For the next two hours Mr. Park was hammered by every closer in the dealership. I got to watch a variety of styles: impatience, cajoling, begging, threats. Through all this his wife sat by his side clutching their little baby. Mr. Park began complaining that he had a headache and his manner became increasingly angry. At one point he ominously muttered, "Don't screw with me."

I couldn't exactly figure out what had happened to the deal. Yes, he had been offered $4,000 for his trade. I knew that for sure. And I seemed to recall that he had been offered the minivan, including the extras, for as low as $26,500. Those extras had not been written into the contract or they had been conveniently forgotten. They reemerged at the end and completely blew the deal. Finally, Michael picked up the papers and walked out of the cubicle muttering, "You're wasting our time."

Mr. Park asked me several times whether or not I had heard the earlier offer of $4,000 for his trade. I wouldn't commit to this since I knew that I would be fired if it ever came back on me. When I last saw the Park family, they were heading across the street to another dealership.

Moments later Michael appeared and said, "Sorry about your deal, but those people are completely impossible." Actually, he didn't say "those people." He named an Asian country where, he had earlier told me, the people were all "grinders." Ironically, in my attempts to make conversation with Mr. Park I had learned that he wasn't from that country at all. He was from a neighboring country which wasn't on Michael's list of primo grinders. So here was my boss, adhering to stereotypes — but doing it incorrectly. That struck me as the worst of both worlds.

All week Michael had been telling me about the Friday morning sales meeting. Each time it came up he would say, "Make sure you're on time."

"What happens if I'm not?" I asked.

"You don't want to find out."

Friday morning rolled around and I made sure I was there in plenty of time. The meetings were held in the lunchroom upstairs and the only way to reach this room was to climb a flight of outside stairs. All the salesmen were gathered at the bottom of the stairs, milling around smoking cigarettes and drinking coffee. Some of the guys were in street clothes, black leather jackets or wearing baseball caps turned backwards. That was because they were working the late shift. They had come in just for the meeting and then would go home and come back again later. Those few lucky salespeople who were off on Friday were required to come to the meeting. If they didn't they wouldn't be allowed to work that weekend.

The rules of the dealership are enforced by threatening to send the offender home. Since we all worked on straight commission, to be sent home meant you eliminated your chances of making any money. The concept of being sent home always reminded me of being in grade school. "If you do that again, we're going to send you home and call your mother."

One day I was standing "on the point" with my hands in my pockets. The point is the entrance to the dealership where cars pulled in from the street. Another salesman came up to me and said, "You're not on my team, but you're from Boston so I'll tell you. If the owner of the dealership sees you standing there playing pocket pool, he goes ballistic. I got sent home one day for doing that." Apparently the owner felt we looked idle and inattentive if we had our hands in our pockets.

Salespeople also got fired at the drop of a hat. This was known as, "getting blown off." I came into work one morning and heard the guys talking about how another salesman got fired the night before. He had done something to a customer that the GM (general manager) didn't like. The salesman was called into the tower and he stumbled out moments later in a state of shock. He said to the other salesmen, "I don't believe it, he just blew me off." The GM saw the fired salesman talking to the other guys and charged out on the lot, screaming, "Get away from them! I don't want you talking to anyone!"

So the salesmen were very careful to show up for the Friday morning sales meetings on time. I was wondering what was going to happen in the meeting when the door at the top of the stairs burst open and loud, pounding music poured out. The general manager appeared and yelled, "All right guys, get in here!"

We all ran up the stairs, high-fiving the sales managers as we went like we were taking the field in an all-star game. As we gathered in the room, we were all clapping to the music that was booming from a stereo set up in the corner. It was as loud as a rock concert and was playing that music they use at ball parks: "We will, we will, ROCK YOU!"

The music died and one of the sales managers, a short guy in his forties, with wavy black hair, ran out in front of us pumping his fists and screaming, "Killer, killer, KILLER WEEKEND!!!"

We all cheered.

"What are you going to do this weekend?" he yelled.

"Sell cars!" we yelled back at him.

For 45 minutes we listened to motivational speeches from the managers. Then the GM appeared and told us about the various bonuses. If you sold three cars you got $250, four cars and you got $350, five cars and you got $500. And then he added, "If the dealership sells 60 cars, all the bonuses double. Sell five cars you get a grand. It's that simple." More ballpark music followed this and we left the room shaking hands and giving more high fives. We were pumped. We ran outside to sell cars. There was only one problem.

Where were the customers?

I had been warned that Fridays were bad because you have all the salespeople on the lot and no customers until late in the afternoon. But still, there was a lot going on. They had set up an inflatable bouncing room for kids, a petting zoo, and a grill preparing free hot dogs and hamburgers under a tent set up to one side of the showroom. The smell of cooking burgers began drifting across the lot. Soon there was a long line of salesman waiting for the free chow.

But that wasn't all. In the lobby, a table was set up and "free gifts" (are gifts ever anything but free?) were on display. If you came in and test-drove a car, you got either a key case or a portable camera. I don't think I need to tell you about the quality of these items. The gifts were handed out by young women with bored expressions and tight tops.

Moving back outside I saw two people roaming the lot dressed in animal suits. One was a brown fuzzy bear and the other was a floppy-eared rabbit. Later I talked to the women inside the suits and they complained about how hot the costumes were and how little kids kept poking them to see if they were real.

It wasn't until the next week that I finally "popped my cherry." It was about 8:30 p.m. and a couple came through the bushes again. Coincidentally they were also interested in the minivan — the exact model that Mr. Park had wanted to buy. Apparently they had been at the dealership next door and just decided to stroll over to see what we had.

A truck was parked on the lot shining searchlights into the air to attract buyers. A diesel generator was cranked up to provide power. As I approached this couple, it was very hard to hear what they said because of the roar of the generator. But the body language of the tall, heavy-set man in his 30s, was hostile. His wife was shy. I told them we had more minivans in the back, and invited them to come with me to look at them. As we walked together I was able to shake their hands and get some general information about them.

They found a few minivans that they liked but had questions about inventory — did we have any other minivans still available? This was a good chance to bring them inside. It was also cold out and they were tired from shopping.

Inside, they sat down as I filled out a guest sheet with basic information. They were surprisingly willing to provide their phone number, address and the amount they would put as a down payment.

I brought Michael, my assistant sales manager, into the office and he met the couple. I noticed that he always began by praising the car the customer was considering, as if they had made a wise decision. He would say something like: "So you're interested in the minivan. Did you know that's our best-selling vehicle here? Everyone loves it. It can hold seven people, but it drives like a car. You can't go wrong with it. And the prices here are the best in the area." Later, I would learn how this was called raising the customer's excitement level. If they were excited about the car, they wouldn't be rational when it came to making a deal.

Naturally, the couple began asking about the price of different models. Michael pointed to me and said, "He'll take you back out to the lot. Find one or two minivans you like. Get the stock numbers and we'll get specific about payments. How's that sound?"

We went back outside, and located a minivan that was buried deep in a row of trucks. The couple made their choice based on color and sticker price. We went back inside, and Michael quoted them a monthly payment of about $550. The man balked at these figures saying he had been given lower numbers by another dealership. Michael countered by saying it was difficult to compare two vehicles with different options.

"I just had an idea," he said. "There may be a rebate on this vehicle we could use to bring the payment down. I'll go see if it's still in effect." He disappeared into the sales tower.

Whenever someone failed to accept the "first pencil" (the high numbers they begin with) Michael would always have "an idea" or "remember" a rebate or special interest rate program. This avoided the head-to-head confrontation. It also promoted the sense that we were working in the customer's best interest.

When Michael left to go to talk to "the desk" (the sales managers) I sat down with the couple and made small talk. I noticed that the man had his cellular phone out and was punching the keys. I asked if he was playing computer games. He smiled and said, "I'm playing a game called 'calculator.'" I realized he was running the numbers Michael suggested. It struck me that this might be a good way to check numbers at a dealership. If a customer whips out a calculator it could really tick off the salesman. But we're getting used to seeing cellular phones in everybody's hands.

Michael went back and forth with the guy several times, but they seemed to be settling on monthly payments of $475. Finally, Michael held out his hand and said, "Do we have a deal?" They shook hands.

If the minivan was selling for a sticker price of about $24,000 with options and tax, a 60-month loan at 9 percent interest would be $475 a month. However, I later checked Edmunds.com True Market Value prices and saw that this van should have been discounted about $1,700 from the sticker price. Then, monthly payments at 9 percent would have been $430 a month. Over the life of the loan this was a $2,520 difference.

The long paperwork process began. They ran a credit report and the couple had a good score. Still, they needed to sign the contracts in the finance and insurance room, or "F&I."

The dealership was closed now, and most of the salesmen and customers had left. But I had been warned that we would stay as long as it took to get the deal done. After about a half an hour, one of the sales managers told me to move the couple into the "fish room." This meant I was to put them into a waiting room built around a large aquarium. Apparently, it was thought that gazing at fish relaxes people.

Later, Michael told me that on weekends he doesn't like people to go into the fish room. "I've had a couple of deals blow out of the fish room. They start talking to each other, comparing deals and payments, next thing you know one of them is pissed off and they leave. I like to stay with the customer the whole time."

Luckily, my customers were the only ones in the fish room. I took the minivan to the service department and told a porter to wash and detail it. Then I took it down the street and bought a full tank of gas. It's funny because, here is a customer who has just spent about $24,000 on a new minivan. But when you tell them you're buying them a free tank of gas they get all excited.

Back inside the dealership, I checked on the couple in F&I. Apparently, they were having difficulty approving the $3,500 down payment on their American Express card. It was after midnight and the approval office was closed. By now this poor couple was slumped in their chairs utterly drained. Michael pulled me aside and said, "If their credit card doesn't go through you're going to have to follow them to their house and get a check." Eventually, the charge was approved and the people were allowed to buy their new minivan. We gave them a short demonstration of all the features and they drove off into the night.

By now it was 1 a.m., but I still wasn't done. The desk manager told me I had to put up "the blocker" — a vehicle parked across the entrance to prevent the new cars from being stolen. This was part of the nightly ritual called "lock and block." You check to make sure all the vehicles are locked, and then you move a car to block the entrance.

I put the blocker in place, and told Michael I was leaving. He shook my hand. "Congratulations on your first sale," he said.

I asked him how we did on the deal.

"The problem was, he made me bargain against the other dealership. But we sold the car for sticker. That's the good part. There'll be $300 or $400 in it for you."

Actually, when I got my voucher, I made a $501 commission on a payable gross of $1,689 — almost the $1,700 discount that Edmunds.com advised. Our commissions were paid twice a month. But we received vouchers within a day or two showing how much we had to look forward to. The vouchers were yellow carbon copy slips from the dealership's books. The salesmen kept the vouchers in their wallets and took them out to show each other like scalps.

A friend came up to me on the lot one day and said in a confidential voice, "Want to see a bomber?" He unfolded the voucher and showed me the yellow slip: $1,274. "Is that unreal or what? What a bomber." If his commission was $1,274 (30 percent of the dealership's profit) the dealership made $4,242. That's a lot of profit to make on a $25,000 car — about 16 percent.

From my commission check it was clear that the minivan couple could have made a better deal and saved several thousand dollars. So where did they go wrong? Well, first of all, they negotiated as monthly payment buyers, rather than bargaining on the purchase price of the vehicle. When you agree to be a "monthly payment buyer" several variables are introduced that are harder to keep track of: the term of the loan can be extended up to 72 months (six years!) without your awareness and the interest rate can be raised. When you bargain on purchase price, it is a cleaner, simpler way of negotiating.

After my minivan customers left that night, I went back into the new car tower to check out. I looked up at the enormous white board on the wall that listed the salesmen on the lot. The sales manager was coloring in a blue box next to my name. My first sale. I was finally on the scoreboard.

Source: Edmunds.com