If you’ve ever considered buying a car at a dealership and got to the negotiating part, you’ve almost certainly had your salesperson write up a sales contract and then state, “I’ll be right back, I’ve got to get this approved by my manager.” Funny thing is that a lot of buyers think this is some sort of “car dealer trick,” some sort of a good cop/bad cop routine designed to make you pay more money. As it turns out, that’s not the case. There is a legitimate reason most dealers do this and the reason is far more benign than what most people think. Here’s the story.
Division of Labor
The first thing to consider is that operating a car dealership is far more complex than you might think. Almost every week things change: different sales promotions from the factory, different financing plans, the dealer’s own promotions, special internet sales programs and multitude of other things. The bottom line is that it is almost impossible for any one person to stay on top of all this stuff, so dealerships have different departments to handle different parts of the business.
Your Salesperson is Not the Sales Manager
The first thing to know is that the job of the salesperson and the sales manager are typically quite different. The salesperson’s job is to get to know you and help you find a vehicle that meets your needs. In order to do this, they need not only good personal skills, they also need to know everything about the vehicles being sold. And with today’s highly technical cars, this isn’t easy.
The sales manager’s job is to stay on top of all the rapidly changing specials and promotions, and still know the core aspects of the dealership’s sales process. In addition, they oversee all the sales staff and make sure that each deal executed is structured properly, is error-free and frankly makes sense for both the customer and the dealership. As the sales people at Patrick Cars of Schaumburg, IL, tell us sometimes it’s challenging.
A Good Example
Here’s an example of just one factor sales managers deal with daily: credit ratings. If a client wants a particular car but has a poor credit, the sales manager needs to do some number crunching. Sometimes dealerships actually have to pay a fee to financial institutions to get them to accept “poor credit loans.” As you might imagine, this makes a big difference on whether the dealer will negotiate very much on the price of the car you want. Your credit rating also makes a difference on how much cash you have to pay as a down payment. For example, excellent credit customers are typically given lower interest rates, and can borrow up to 100% of the retail book value of a car. Poor credit customers are offered higher interest rates and can sometimes only borrow up to 70% of the wholesale book value of a car.
Then There’s the Trade-in
The other thing your salespeople are working on is the value of your trade. All dealers go to the same auctions and use the same “books” when evaluating trades. However, sometimes your dealerships will pay more for your trade-in than other dealerships. This means they give you more than the true market value of your car. There’s no free lunch. When a dealership offers you a substantial sum for your trade-in, they may be making it up on the “deal” they make you. This isn’t any tomfoolery, it’s just making the numbers work for you and the dealership.
In this article, we tried to give you a feeling for the complexities that go on behind the scene when you buy a car. The primary point we wanted to make is that when your salesperson excuses themselves from the table and says” I’ve got to get this approved by my manager,” that this a normal part of the dealership sales process. It’s a procedure that is practiced at virtually every dealership and for a good reason.
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