1. Buying a car

2. Get to know the customer 1. Get to Know Your Customer a. First impressions 1. How are you dressed? 2. How are you groomed? 3. What is your body language? 4. How well do you speak? 5. What kind of car did you drive in with? b. Which car will you accept? 1. Why do you want a particular model? 2. What model (family, sporty, high mileage, prestige)? 3. Do you use your car for business? 4. Are you a “shopper” or a “buyer”? 5. Why did you come to this dealership?

3. Get to know the customer -2 c. Are you financially qualified? 1. What kind of work do you do? 2. Have you financed the purchase of a car before? 3. What range of vehicle purchase price is acceptable? 4. What is the maximum monthly payment you’re willing to make? 5. Are you willing to purchase the car upon approval with poor credit? 6. Are you going to trade in your old car? 7. How much can you get for your trade-in? 8. Does your trade-in have positive equity? 9. Is this going to be a cash sale? 10. How much cash can you come up with for a down payment, taxes & tag? d. When do you want to take delivery?

4. commitment a. Is the customer prepared to make a decision today? (If the answer is NO, find out why not, and overcome that reluctance.) b. Are they looking for a specific model, equipped in a particular way? (They’ve been shopping at other dealers.) 1. Available? (They’re looking for a good price only. Show the car and begin negotiations.) 2. Not Available? (Probably won’t compromise on color or options, unless patience is running out. Try to switch to a comparable car that the customer can accept. If that fails, get a buying commitment based on the promise of quick delivery at absolute best price of the exact vehicle the customer wants.)

5. commitment c. Are they looking for just a specific model? 1. Find out what kind of options the customer wants. 2. Show the cars on the lot that have those options (preferably more) 3. If they can handle a “bump” (price increase), move into a higherpriced model, but only if the profit margin is good for selling it. 4. Point out the inflated dealer mark-up price or sticker price. a. Negative reaction? Show a cheaper model. b. Business car? Show a more expensive model. 5. If the customer has been shopping at other dealers, why didn’t they buy? 6. You MUST get a commitment on a specific vehicle c. Doesn’t matter how many vehicles you have to show them. d. Usually can reduce the inventory down to 4 or 5 cars. e. Usually can lead the customer to something that is close to what they want.

6. commitment d. Get the verbal commitment. (“Is this the car you’d like to own?”) 1. Yes (Congratulations on the wise decision. Let’s go work out the details!) 2. No (What are you not happy with? Keep showing cars until the answer is ‘Yes’)

7. Price a. Never tell the customer what you’ll sell the car for. b. Find out how much the customer wants in trade-in value. 1. Always respond by saying that’s too much. 2. Get someone that the customer never sees (like the sales manager or the used car manager) to appraise the car. c. Actual purchase price is determined by many factors. 1. How much is the customer willing to pay? 2. Is there a trade involved? Does it have positive or negative equity? How little is the customer willing to accept for the trade-in? 3. Is the financing through the dealership, or a cash deal? 4. Will a co-signer be required? 5. Which is more important to the customer: purchase price or monthly payment? 6. How many high profit, dealer add-ons can you get the customer to accept?

8. Negotiating Price d. Has the customer been shopping at other dealers? 1. Yes? Chance for a very high profit sale is reduced. 2. No? Good chances of a very high profit sale. e. Work out a cost sheet for the customer. 1. List all the options already on the car. 2. Automatically include a high profit protection package. 3. Go through the list of dealer installed options and suggest why they would be good for the customer. 4. Emphasize reducing the dollar amount of additional purchases down to the lowest common denominator (i.e. only 20 cents a day—you can afford 20 cents, can’t you?) 5. Mark where the customer is to sign the cost sheet

9. Negotiating Price f. Haggle the price of the car. 1. “This is the car you told me that you wanted to own, isn’t it?” 2. Two negotiating strategies a. “What WOULD you be willing to pay for it?” (Always say that it’s too low. Lead the customer into offering a higher price. Keep doing that until the customer reaches “final offer” price.) b. Eliminate some of the lower profit options, thus reducing the total purchase price. 3. Usually, a combination of both options is used. 4. Get the customer to sign the refigured cost sheet and a deposit. g. Go see the sales manager to “try” to get an approval.

10. Negotiating Price 4. Hammering Out the Purchase Approval a. The sales manager won’t approve a deal for that low a price. b. Make the customer feel a sense of urgency. 1. Another salesman has a deal working on the same car. 2. The other customer might possibly have a credit problem. c. When the customer raises your offer for the car, go back to the sales manager. Keep doing this until the customer refuses to go any higher. d. Get the sales manager personally involved now. 1. Try to “bump” the price again. 2. Usually the sales manager is the best car salesperson around. e. Haggle the amount of the trade-in. 1. Something will always be found to lower the “allowance” for the car. 2. Used car manager tells the customer they can “allow” so much for the trade-in. 3. Credit report contains information on the car payment amounts and the loan balance. f. Now get the sales manager to sign the buyer’s order, representing the dealership, to make the contract official.

11. Negotiating Price a. Never tell the customer what you’ll sell the car for. b. Find out how much the customer wants in trade-in value. 1. Always respond by saying that’s too much. 2. Get someone that the customer never sees (like the sales manager or the used car manager) to appraise the car. c. Actual purchase price is determined by many factors. 1. How much is the customer willing to pay? 2. Is there a trade involved? Does it have positive or negative equity? How little is the customer willing to accept for the trade-in? 3. Is the financing through the dealership, or a cash deal? 4. Will a co-signer be required? 5. Which is more important to the customer: purchase price or monthly payment? 6. How many high profit, dealer add-ons can you get the customer to accept? d. Has the customer been shopping

12. Financing 5. Arranging the Financing a. Take the customer into the Finance and Insurance office to “have the paperwork completed.” 1. Usually they are 100% commissioned sales persons, often the highest paid and most skilled at the dealership. 2. Consumers don’t want to appear uncooperative or unintelligent. 3. Customer has a great sense of relief at “surviving” the salesperson and the sales manager. 4. A great deal of time has been consumed up to this point; there is lowered resistance and an anxiousness to get the whole thing over. 5. Most people can’t calculate compound interest and principal payments. Few people will challenge an F&I person’s claims.

13. Financing c. Extended Warranties 1. Explain the benefits of purchasing some type of vehicle breakdown coverage. 2. Don’t give specific details, or mislead the customer, hoping they will sign without examining it too closely. 3. Agree to a certain protection coverage, but have the cost to the customer be much greater than the cost to the dealer.

14. Negotiations 1. If you are in a negotiation, and you feel that you cannot get up from the bargaining table and leave at any time, you are bound to lose the negotiation. 2. When in doubt, see Rule #1. 3. Negotiate only with the person that can make the final decision, not a middleman. 4. Know what motivates them—but tell them nothing about your motives. 5. Show them the bitterest medicine first. Any “sugar” you add later then makes the bitter medicine easier to swallow. 6. Your opening offer should always be less than you expect they will offer. 7. After you’ve made your first offer, KEEP QUIET! Whoever speaks next loses!! 8. Show them their advantages for doing business your way. 9. Have them agree with you a little bit at a time—then repeat their agreements. 10. Pre-suppose what questions you’ll be asked—and be ready with an answer. 11. Never answer a question with a direct answer—unless it’s to your advantage. 12. When asked a question you don’t want to answer, ask them a question.

15. Customer advice 1. Shopping a. Best time of year 1. Winter months have good bargains (less money to spend, poorer weather conditions, sales are slow) 2. Summer months can be good also (sales of current-year model slowed down, consumers waiting for next year’s models) 3. Be cautious during springtime (consumers come out of the doldrums, car sales increase) b. Best time of month (end of the month is the best time to buy a car— salespeople may sacrifice commissions to meet quotas)

16. Customer Advice c. Evaluate the dealer 1. Other than price, service is what sets dealers apart. 2. Questions to ask the service manager or mechanic at a dealership a. How long have you been working here? b. Do you like working here? c. Are there enough mechanics to handle the work load? d. Is the parts inventory adequate, or are parts continually out of stock? e. How many service managers do they employ? f. Do they supply loaner cars? 3. Ask customers at the service department how they have been treated

17. Customer Advice d. Figure out what you want 1. Visit dealerships, but leave the checkbook home. 2. Visit dealerships after closing hours; window-shop the cars on the lot. 3. Read Consumer Reports or buy magazines like Road & Track’s Buyer’s Guide for test reports and evaluations of new cars 4. Visit the public library 5. Ask opinions of other people 6. Decide what options you want, or are considering

18. Customer Advice Do your homework 1. How much can you afford to spend each month? 2. How long do you expect to own the car? 3. How well do you tend to maintain a car? 4. How many miles a year will you drive? 5. Where do you drive? 6. Know the dealer’s cost of price, the MSRP, and the car’s sticker price.

19. Customer Advice g. Thoroughly Road-Test the Car Model 1. Try a variety of roads and speeds. 2. Examine the noise level with the windows up, down, top on and off for convertibles. 3. If the car has a manual transmission, check the smoothness of the shifting with the car stationary and in motion. 4. If the car is a 4-Wheel Drive vehicle, be sure to check out all gear shifts and transmission settings. 5. Take plenty of time on the test drive. 6. Never let the car salesman know how you feel about the car.

20. Customer Advice a. Don’t let emotion sway you into making a hasty (expensive) decision. b. Ask for the discount and/or to have some extras thrown into the deal. c. Find out what the car cost the dealer. Negotiate up from their invoice price, not down from the sticker price. d. Keep the deal simple—negotiating a price for a new car, arranging financing for it, and trading in the old vehicle should be treated as three separate transactions. e. Immediately ask if the salesperson is qualified to make the sale. If not, ask the sales manager to be included from the start of negotiations. f. Be prepared to put down a deposit as soon as you’ve arrived at a fair price, not a day later. Be prepared to walk out at ANY time.