If you owned a car dealership...

[Lomac]

We've all had experiences at car dealerships. While some may have been good, chances are the majority were "meh" at best, or terrible at worst. If you decided to open up a dealership, how would you run it in order to ensure you have repeat customers and not end up as another stealership statistic?

Personally, my best experiences were at a Saturn and Honda dealership. Say what you will about Saturn vehicles, the sales experience you had there were probably the greatest you could get outside of many luxury brands (and even higher than some). Extremely friendly staff, no pressure tactics, no stupid four column charts, fresh cookies (shut up, they were delicious!) and extended test drives available. The Honda dealership was more of a typical place, but the salesman I had was fantastic. I bought my CPO Accord there and he was more than willing to go the distance for me, even though I knew he would be making less commission in the process.

So, what does that have anything to do with the question? Keeping in mind that I technically have little knowledge of financially running a dealership, here's what I'd like to ideally do in a perfect world.

- Introduce a base salary with a small flat commission on every new car sold. Smaller flat commission would be available on used cars.
- No Haggle Pricing. Depending on MSRP and the at-cost pricing, I'd try to ensure that every car is at least 5% less than other competitors to make up for the no haggling, assuming the parent company allows for it
- Taking a page out of the old Saturn playbook, make sure there's always fresh baked goods and (good) free coffee and other drinks for customers, even if they're just browsing.
- With the base salary, it should mostly decrease pressure tactic sales people, but if it doesn't, make sure that they know it's not welcome here

I'm sure there are other ways to run a dealership without making a customer want to come back and carpet bomb the place, but I'm tired and can't think of anything else right now. lol

What would you all do?

[dared3vil0]

Interesting thread. I think Coastal Ford in Burnaby had a fantastic setup going between summer 2012 and mid summer 2013, basically they didn't hassle you on the lot, but as soon as you made it clear you were looking for someone, a sales person would hurry out. Wanted to go on a test drive? Sure, here are the keys, go by yourself and take as much time as you need. Even to a young guy, even when i test drove a 6MT Mustang GT.

Negotiations were easy, they were reasonable, I was reasonable, and off we went. Great experience.


Fast forward to the last 10 months or so i have a friend who worked there as a summer job, apparently the new process is to grab new ups walking in the door, and literally ask them for their social insurance number, and all personal info so they can pull an equifax beacon score and try to get you into the max car they can get you approved for on credit,

general super high pressure, old fashioned pressure tactics and asshole sales people/management.

[noclue]

Lomac what you described as an ideal dealership is the carmax business model in the United States, except they only sell used cars.

sleaziest car dealers I've met were American ones. They still live in the past.. worst offenders are chrysler/dodge and GM. Newer ford dealers were pretty decent.

I had a decent experience at Mercedes-Benz, but maybe cause they are corporate owned.

[xjc11]

Not stamp the dealerships logo on customer cars as if they were billboards (ie. Brian jessel bmw)

[supafamous]

1) I'd get rid of the 3rd party dealership model and have the car companies own the dealers.
2) No haggle pricing.
3) The "add-ons" that the business manager always tries to foist on you would be posted before you get to that stage. At least it's out in the open.

Not sure about the employment model but I think there'd be a pretty reasonable base salary plus commission that could boost their earnings by 50% or more - maybe something like how Sleep Country Canada compensates their staff.

[Rich Sandor]

So, what does that have anything to do with the question? Keeping in mind that I technically have little knowledge of financially running a dealership, here's what I'd like to ideally do in a perfect world.

clearly.

- Introduce a base salary with a small flat commission on every new car sold. Smaller flat commission would be available on used cars.

There is a labour law in BC that requires even commission sales staff to receive minimum compensation for the time they are require to be on shift at a dealer. It works out to about $1500/mo after tax, or a 'salary' of $18,000/year. Most dealerships have a flat of $150-$250 on new cars, because new cars have, in general, very little markup. That is PEANUTS. You have to sell 10 cars a month just to get minimum wage, and cars these days are COMPLICATED and are TIME CONSUMING to sell, much moreso than in the past. The REALLY frustrating thing is that it used to be that the cars with little profit in them were fast sales with little effort spend explaining features (cuz there werent any) but now even the most basic $16,000 car takes multiple HOURS to PROPERLY present to a customer. USED cars generally have more markup in them, and that's how most salespeople can make a decent living, or with a combination of volume new (no profit per car, but unit bonus, and some used with decent profit.)

A decent salary without (or with little) commission just does not sell cars. Manufacturers offer incentives to dealer owners to sell more cars. The owner NEEDS the staff to move metal. If they are on salary, they won't give a rat's ass unless there is a minimum to sell, and then again, you have sales pressure - either from someone who is about to lose their job, or someone who is hungry for a decent living. No dealer that I know of offers a healthy salary to salespeople, because it simply does not work. Welcome to the world of SALES!

- No Haggle Pricing. Depending on MSRP and the at-cost pricing, I'd try to ensure that every car is at least 5% less than other competitors to make up for the no haggling, assuming the parent company allows for it

The manufacturer already spends hundreds of thousands of dollars to price their cars competitively. You don't need to discount every car in order to justify "no haggling." All you need to do is show that it is already a good value compared to X and Y car or that it is exactly what the buyer needs/wants. Trust me, it's the CUSTOMER that wants to haggle, NOT the dealer.

Moreover, most new cars only have about 10-15% markup. So you want to just instantly GIVE AWAY 30-50% of your total income???

- Taking a page out of the old Saturn playbook, make sure there's always fresh baked goods and (good) free coffee and other drinks for customers, even if they're just browsing.

Wait, isn't Saturn OUT OF BUSINESS? You would be too if you gave away $10,000 a year in free cookies. It's a gimmick. The coffee is there for the staff to stay awake without leaving the sales floor, and as a symbolic offering to customers to get them to hang around and sip while looking at cars. It's a justifiable business expense, but free food is difficult to justify.

- With the base salary, it should mostly decrease pressure tactic sales people, but if it doesn't, make sure that they know it's not welcome here

It just decreases total sales because the sales people make the same salary whether they sell or not. Why should they even get off their asses when you walk in?

To answer your original question:
The PROPER way to reduce sales pressure and eliminate bad sales people is careful hiring and proper training. If you follow the tried and tested SALES PROCESS (yes there is a SPECIFIC process to selling anything) then you are on track to success. If you try to take shortcuts, it amounts to failure. If you follow the process, you know where the buyer is at in terms of readiness to buy, and you can ask an appropriate question as to how you can earn their business.

Also, my perception of simply asking for someone's business could amount to 'sales pressure' in some people's eyes, whereas it might also seem inadequate in a manager's eyes. It's all very subjective and dynamic depending on the scenario. In my mind, if I spend 2 hours with a salesperson, and at the end he asks me if there is anything he can do to earn my business today - That is NOT sales pressure. That is a fair question. On the other hand, asking me what they can do to get a deal today - when I have already said multiple times there is no way I'm buying today - is just plain incompetence.

Over 6 years selling cars (I don't anymore) I know I have probably put too much pressure on a few select people - but the VAST majority of people who have bought from me said I was low pressure - and it had nothing to do with my pay scale - it was my personality. And it did NOT help me sell volume, but it did help me make more profit per car. The problem is when there is no profit per car to begin with and too many other salespeople scrambling for customers, and the managers want you to sell more volume.

Trust me, if there is ANYTHING a dealer can do to sell more cars and be successful, it's already been tried. The magic comes in terms of STICKING TO the proper sales process and the hard work of following up with customers over months and years!!!

And even if the dealer is doing EVERYTHING to be a good honest dealer, there will always be breakdowns in communication where a customer leaves pissed off. It's just impossible to please 100% of the people 100% of the time.

[Rich Sandor]

Originally Posted by supafamous

1) I'd get rid of the 3rd party dealership model and have the car companies own the dealers.

Works fine for a few select extremely well funded manufacturers, but others would not be able to afford the cost of building and outright owning multiple dealerships.

It's better for the manufacturer to have someone else build and own the dealership.

In some states, like texas, it's also illegal for the manufacturer to run the dealership.

[Marshall Placid]

Originally Posted by Rich Sandor

Works fine for a few select extremely well funded manufacturers, but others would not be able to afford the cost of building and outright owning multiple dealerships.

It's better for the manufacturer to have someone else build and own the dealership.

In some states, like texas, it's also illegal for the manufacturer to run the dealership.

Quite true.

Audi's newest dealerships costs $20 million + to build (like the Audi Downtown one).

It's a massive undertaking, so if you wanted, say, 30 dealerships in Canada, you would need a capital infusion of $600 million.

Also, most, if not all of the car brands/manufacturers started small, so they DID NOT have the cash to build their own dealerships "back in the days", so they used the dealership model (almost like a franchise, but more like a reseller model) to sell their cars, and use other investors' money.

In addition, in the past, there was no guarantee that their cars would sell well (take for example Daewoo Motors), so having dealers sell their cars was a low-risk approach to selling cars.

Once they went with the dealership model, it is hard to break out of that process and start their own dealerships, because the current/established locally owned dealerships will definitely NOT want the manufacturers to have their own dealerships (lawsuits, conflict of interest, competition, etc.).

[Noreason]

I think the sales pressure is overrated, I've been in dealers in the past year or so for my own car and just recently with my parents looking for a car for them.

We straight up told the salespeople who saw us browsing that we were looking for a car couple months down the road and they still wanted to help us and offered to do test drives with little or no pressure to 'sell' anywhere in the process. Most of the time it was about the merits of the car itself.

When you negotiate the price, generally you have a wealth of info online on the markups and what other people were able to get. As long as you let the salesperson know in a reasonable manner, they will often go to bat for you to close the deal.

If not, find another salesperson.

[multicartual]

Oh man I would sell nothing but 302 swapped E36 BMWs and my showroom would have porn on the screen, fresh pizza and Jack Daniels on tap

[nsx042003]

I would want to improve sales' knowledge about the cars they are selling. A lot of them just don't know wtf they are on about.

[Zedbra]

Originally Posted by Rich Sandor

A decent salary without (or with little) commission just does not sell cars. Manufacturers offer incentives to dealer owners to sell more cars. The owner NEEDS the staff to move metal. If they are on salary, they won't give a rat's ass unless there is a minimum to sell, and then again, you have sales pressure - either from someone who is about to lose their job, or someone who is hungry for a decent living. No dealer that I know of offers a healthy salary to salespeople, because it simply does not work. Welcome to the world of SALES!


It just decreases total sales because the sales people make the same salary whether they sell or not. Why should they even get off their asses when you walk in?

You should state that this is the world of car SALES. There are many many SALES positions that pay an extremely good salary and offer a great commission structure, benefits, expenses etc. I know, because I am a SALESman and have been for about 20 years. Getting off my arse and selling is something I do because I have pride and ethics, plus I like my paycheques closer together - kids aren't cheap. I make a very comfortable living for myself and my family.

Car salesmen get the title 'salesmen' just by accepting the job. I'll leave it at that, as I feel like I could keep going on.

[punkwax]

I would run the Cactus Club of car dealerships.

[asian_XL]

Originally Posted by nsx042003

I would want to improve sales' knowledge about the cars they are selling. A lot of them just don't know wtf they are on about.

such as?

unless they tell false information about cars, such as 3 yrs warranty instead 5yr. A car sales no need to learn how DSG or how VTEC work.

[hchang]

Originally Posted by xjc11

Not stamp the dealerships logo on customer cars as if they were billboards (ie. Brian jessel bmw)

I agree with you 100% but from a business standpoint that makes sense.

It's free advertising and the majority of these owners of the vehicles probably don't even realize it's there.

Not everybody understands the Auto Group/Dealer vs manufacturer owned concept. They just think it's another BMW logo.

[Traum]

Originally Posted by supafamous

1) I'd get rid of the 3rd party dealership model and have the car companies own the dealers.

Originally Posted by Rich Sandor

Works fine for a few select extremely well funded manufacturers, but others would not be able to afford the cost of building and outright owning multiple dealerships.

It's better for the manufacturer to have someone else build and own the dealership.

Rich, thank you for sharing your insights as a (former) car sales person. Would you care to explain why you think a manufacturer-operated dealership would not be a good idea for the majority of manufacturers?

Personally, I see the benefits of both models. In particular, for the majority of mass volume manufacturers (GM, Ford, Toyota, Honda, Nissan, Hyundai, Mercedes, BMW, Volkswagen, etc.), I see more benefits than drawbacks for them to operate their own dealerships, with the biggest benefit being able to cut out the middle man. As you were saying yourself, the profit margins are around 10-15% on new cars. By cutting the dealership middle man out, that is an instant extra 10-15% profit right there for the manufacturers themselves.

In some states, like texas, it's also illegal for the manufacturer to run the dealership.

And as result of this, Texas, Arizona, and New Jersey cannot sell Tesla at all. I really cannot see how that is done in the consumers best interest.

[GabAlmighty]

Originally Posted by punkwax

I would run the Cactus Club of car dealerships.

If anyone wants some good eye candy while purchasing a new GM I have a friend who just started at Eagle Ridge GM and she is a looker.

[ae101]

i would make it like captain happy bubbles & then hire shark tank period, am i doing it right

[toyota86]

I'm one of those people that detest the current dealership model. I'm one of those people that knows exactly what I want and exactly how much I'm willing to pay. Almost every new/used dealership I've dealt doesn't seem to understand this. I don't know what the proper procedures are but it seems to falter when dealing with people like me.

In the ideal world, I want to be able to buy a car like I buy from a vending machine, online shop, or a grocery store. No salesman. I'll do my own research, if I like it, and the price tag is right, I'll proceed with checkout. All the physical store needs are lot attendant that puts the cars back after test drive, some guy that does custom factory orders, some finance guys at the checkout counter.

In the current model, as a customer, I want this:

- Tell me straight up if the car I want is your inventory or not. When dealing with brand new, when can you bring it in the EXACT car I spec'd. I don't want to be up sold something similar or more expensive unless I asked to be.

- I want final pricing like I would if I went to buy a loaf of bread from the store. I don't care about shipping, pdi, doc, enviro, or other hidden mark up fees. Luring me in with a low price only to tack on a bunch of fees after will just make me irritated.

- Negotiations to be done on the out the door, all included, price.

- Simple yes and no answers are welcomed. Too many salesmen beat around the bush and go in circles. I don't know if this is part of the sop but its annoying.

- Don't waste my time and I won't waste yours. I don't want to see another episode of I have to speak with my manager first.

- As always, pressure tactics don't work. If I'm busy, I will walk. If I'm free, I will troll.

[LP700-4]

I'd make internet sales a priority. In this day and age most people that buy cars already know exactly what they want and done their homework regarding the car. I'd only need the sales to go over numbers and negotiate a price, followed by a in person test drive.

Some dealerships I hate when I email asking for a detailed quote and possible negotiations and all they do is reply with come in and we'll talk. As if im going to drive an hour just to be told that they can't do my price.

[multicartual]

Originally Posted by GabAlmighty

If anyone wants some good eye candy while purchasing a new GM I have a friend who just started at Eagle Ridge GM and she is a looker.

Ugh suburb girls

[multicartual]

All these dudes demanding EXACTLY what they want... you're going to miss out on serendipity that way!

[Rich Sandor]

Originally Posted by Zedbra

You should state that this is the world of car SALES. There are many many SALES positions that pay an extremely good salary and offer a great commission structure, benefits, expenses etc. I know, because I am a SALESman and have been for about 20 years. Getting off my arse and selling is something I do because I have pride and ethics, plus I like my paycheques closer together - kids aren't cheap. I make a very comfortable living for myself and my family.

Car salesmen get the title 'salesmen' just by accepting the job. I'll leave it at that, as I feel like I could keep going on.

I don't know that I would agree that there are "many many" jobs like yours available - and I would think those sorts of 'dream sales jobs' require some specific education or experience to get hired. If not, point me in the right direction and I will work my ass off for a steady paycheque. (as I am doing now in a non-sales role)

This thread is about car sales - and exactly as you said, car sales positions are ROUTINELY filled by completely inexperienced rookies. For those that wonder why, it's because as salespeople get more experienced, they either become top dogs in their store and don't have time to take ups (ienew customers), or they move up to higher quality products. That leaves a vacuum that is usually filled by people trying their hand at cars sales for the first or second time. It's totally a sink or swim situation. To make it worse, not every dealer has managers that are willing or able to properly mentor new staff - which is the MOST important way to ensure the dealer is successful.

To stay on topic, in my experience, the super high end dealerships (merc/porsche/etc) generally do better in the CSI departments than your average 'affordable' car dealer (ford/chevy/honda/toyota/etc) because they generally only hire experienced sales people that can carefully follow the sales process and have enough contacts from years of selling that they do not need to 'pressure' anyone or skip steps.. they just make their daily follow up calls and network aggressively.

[Rich Sandor]

Originally Posted by asian_XL

such as?

unless they tell false information about cars, such as 3 yrs warranty instead 5yr. A car sales no need to learn how DSG or how VTEC work.

My best friend and I worked together for 6 years at the same dealer. I'm a very technical person, he is a clown in comparison. I played to my strengths, he played to his (he's absolutely hilarious with a lot of 'character') We generally sold the same amount of cars over the course of a year. He would sell a bit more because he would spend all his days off at work chasing customers, but I have also heard customers tell me that my coworker doesn't know what the hell he's talking about.. he smartened up and started bringing customers over to me when he had technical questions he couldn't answer. Consequently my beer belly has grown over the years from all the drinks he bought me in appreciation.

It's very possible to sell a lot of cars without having a strong technical understanding, but you have to either ADMIT what you don't know, or be a better bullshitter than the person who is buying from you. I was never good at bullshitting.. so I'd just say: "I don't know, but let's go look it up just to be sure."

But I STILL have to disagree with your comment about 'not need to know DSG or VTEC" a true salesman knows EVERYTHING about what they are selling. If a car has VTEC and the other car the customer is considering is exactly the same but doesn't have anything comparable to VTEC, why wouldn't the salesperson use that to their advantage? EVERY SINGLE THING you can explain about a car that the other sales person forgot to or was too lazy to mention, is going to help you sell your car over the other guy.

[Rich Sandor]

Originally Posted by Traum

Rich, thank you for sharing your insights as a (former) car sales person. Would you care to explain why you think a manufacturer-operated dealership would not be a good idea for the majority of manufacturers?

Marshall Placid gave the best explanation. To open a dealership requires a massive capitol cost. It's financially easier for many groups of wealthy individuals to open Xcar dealerships across various cities, than to have a Xcar itself simultaneously open multiple dealerships around the world. This also allows for much more rapid distribution of product, and far more volume. If your product is being sold at a low price point, there will be little markup, and you will need massive numbers and distribution to be profitable. You will need stores everywhere for people to buy AND SERVICE their vehicles.

A company like Mercedes or Porsche can afford to have lower volume because they have much more profit per car, and they only need to locate in financially successful markets. They don't need as many stores to make money, and thus they can afford to own many of their own stores.

Personally, I see the benefits of both models. In particular, for the majority of mass volume manufacturers (GM, Ford, Toyota, Honda, Nissan, Hyundai, Mercedes, BMW, Volkswagen, etc.), I see more benefits than drawbacks for them to operate their own dealerships, with the biggest benefit being able to cut out the middle man. As you were saying yourself, the profit margins are around 10-15% on new cars. By cutting the dealership middle man out, that is an instant extra 10-15% profit right there for the manufacturers themselves.


And as result of this, Texas, Arizona, and New Jersey cannot sell Tesla at all. I really cannot see how that is done in the consumers best interest.

It's up for debate as to whether or not it's in the the best interest of the customer. The common knee jerk reaction is that consumers want to allow manufacturer owned dealerships - however, some more thought reveals that with no competition, manufacturers could then easily price fix which is NOT in the best interest of consumers.

Texas dealer laws were implemented for the protection of the dealers. The dealers lobbied for it because they were afraid that manufacturers could sell identical product at lower price (which IS true) and therefore put the dealers out of business.

As it is, you can play dealers against each other if they are desperate to sell the same product to you. You can not do that if the dealers have the same owner.. they will fix the price.