What “Factory Invoice” Really Means in Car Sale Advertising

3% over factory invoice! $500 over factory invoice! Which deal is better? Unless the car is a stripped down sub-compact with an invoice of $10,000, the “$500 over” deal will always be the best way to go.

Consider the average selling price today is nearing $32,500. The factory invoice would be about $30,000. $500 over invoice is exactly that, or $30,500. But 3% over is $900, an extra $400 more. Add in the extra sales tax and license fees, plus the additional finance charge and that $400 more becomes closer to $1,800 over the term of the loan.

Some dealers prefer to use ambiguous figures, charging a percentage over invoice. Others work with hard numbers, or $XXX over. The average mark up from invoice to MSRP on compact cars is 6%. For mid-size cars it’s 8%. Depending on the car you’re interested in, subtract that amount from the MSRP and you’ll be within range of the dealer’s cost. Then you’ll know which dealer will give you the best deal. And most times, it will be the one offering the hard number, or $XXX over dealer invoice.

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Is Your Trade-In Worth That Much? Think Again Before Accepting

“I’ll talk to the used car manager and see if I can get another $500 for your trade in”. A typical line of B.S. you’ll hear from many dealers. You want another car and get rid of the one you’re currently driving. But you don’t like the trade-in value you’ve been given. You think it’s worth more. And practically every time, the used car manager knows it is.

This is game they play on you. They’ll appraise your car and hold back $500 to $1,000 on the true value. That way when you complain, the salesman comes on like a super hero and will see what he can do for you. So he gets you the extra money and you feel great. But they already set you up for it. And they know that if they can fool you with the value of your trade-in, they can “put you together” on the selling price of your new car.

Any time a dealer offers you more for your trade, to sweeten the deal, that’s a red flag. That’s when you level the playing field. Demand to see Mannheim Auction reports or the Black Book reports he used to base your trade in value. Expect to see a very stunned look on his face! Few people outside of the business know about True Market Value for trade ins. That’s what Mannheim and Black Book are for.

They publish daily reports of what a car just like yours sold at the dealer auctions. Cars with similar options and mileage. And that is the True Market Value of your car. If the used car manager refuses your request, walk out and don’t turn around for any reason. That’s a dealer that wants to “put you together”. And you don’t want any part of that.

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Sleep On It

You’ve done your homework. You found a dealer that should treat you fairly. Everything seems to be going well. The salesman listens to your needs and finds the right car for you on the lot. You go on the test drive, he asks a few questions but you don’t feel pressured. He’s being friendly and attentive.

Then you come back to the dealership, go to his cubicle, work out a fair price that you both agree to. And then the old blue suede shoes come out. He tells you this is a one-time offer. He can guarantee it for today only. Now you begin to feel the pressure. You’re so very close to buying the car but you’re not all the way there yet.

He’s tightening the screws. He wants you to buy it now and he’s trying to push you into it. He reiterates that the offer is good for today only. But you want more time to think it over. What to do? Let him know this is a major purchase and you want 48 hours to think it over. If you’re ready to buy, you’ll come back in that time and ask for him. If not, you’ll be back when you are ready and buy from him.

But he states once again, he can’t promise the price will be the same in 48 hours or later. This is an incredible deal and it’s one-time only … today! What’s your next step? Thank him for his time and tell him straight up that you’ll go to another dealer who is willing to stand by his price. Today or in 48 hours. Then stand up as if to walk out. See if he blinks. And I’m sure he will.

Get the price guarantee in writing then go home and think about it some more. Odds are, if you like the car and are close to buying, you’ll want it, and go back to the dealer and ask for the salesman.

But beware! The sales manager or salesman may try to up-sell you into dealer installed accessories. Don’t fall for it no matter how enticing they may seem. All you want is the car as-is, at the agreed price, and that’s the only way you’ll buy it. Then stick to it.

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Dealer Vs Dealer = Losing Game for Shopper

Shopping one dealer against another is a losing deal for you. Keep in mind the dealer is always in control of the sale. You can come close to leveling the playing field if you educate yourself with all the information in my book. But you will never have the upper hand. And that’s why shopping one against the other is bad news for you.

A seasoned salesman knows what kind of dealers his competition is. He’s well aware of their sales tactics. And not just dealers of the same brand but dealers of other car lines as well. If you tell me Dealer A gave you a price of $29,999 out the door on a certain model that’s just like the one I have in stock and you’ll but my car if I can beat Dealer A’s price, I’ll immediately know if you’re lying or been lied to.

If $29,999 out the door is below dealer invoice, I’ll know up front. Either I will not tell you and use that against you in negotiations. Or I’ll let you know why your price is not realistic and start the haggling all over again. And knowing my competition, I’ll know if Dealer A low-balled you just get a deal in motion or if you’re just lying. Either way, you’ll come out on the short end of the stick.

I won’t be eager to give you a good deal because you tried to pull one over me. Or you’ll go back to Dealer A only to find out “that car was just sold. But you can have one identical to it for a few dollars more”. Or yes, you can have the car for $29,999 out the door, then get hammered in the finance office for add-on dealer accessories, car alarm, tire insurance, and/or wheel insurance. So now the car is closer to $35,000 out the door. Plus a substantial increase in interest charges since you are financing it.

We can spot this game immediately. And no dealer will sell a car at a loss. No one is in business to lose money. So negotiate honestly. And if I’m not honest with you, walk out and don’t turn back for any reason.

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Friday Funnies for March 16

Sometimes it does you good to see an arrogant salesman get what’s coming to him. Even we don’t like that kind of guy. He’s brash, loud and obnoxious. And treats everyone like they’re worthless and a waste of his time. At an Infiniti dealership I worked at, we had two of them. They sold a lot of cars every month, but they had the most complaints by their customers. The sales manager refused to fire them because they moved the metal. So the rest of us had to suffer them.

On a particular weekend afternoon one of them had a customer returning to buy an SUV she looked at the day before. He grabbed the vehicle and raced it to the detail department. There were two cars ahead of him and he had to wait his turn. After cussing out the detail guys he decided to wash the SUV himself which was against company policy. And his loud-mouth counterpart helped him. That alone would have gotten anyone else fired but since they sold a lot, the sales manager looked the other way.

Well, they were like Laurel and Hardy. The rest of us laughed so hard at them. It was great entertainment for such a slow day. What would’ve taken one of the detail guys about 25 minutes to wash and dry took them over 45 minutes just to wash! And the salesman helping demanded half the deal. The other one yelled at him about messing up the wash job. That turned into a heated argument. Meanwhile, the SUV was far from being completed.

The woman showed up at the dealership to buy her SUV and I took her out back to where Laurel and Hardy were. Four letter words were flying. The detail guys were in hysterics. And the salesman who was supposed to make the sale turned the high pressure soap hose on the other one just as the woman approached. The other salesman ran out of the way and guess who got blasted? Yep, the woman! And I got the ricochet suds.

She ran to the owner’s office and complained. She was dripping wet with soap and threatened to sue. So who finally got fired? Both of them. The sales manager could protect them no more. The owner paid for her cleaning, a new hair style, new shoes, and personally sold her the SUV at a very good discount. And he took the cost of everything out of their final paychecks.

We were very grateful she wasn’t hurt. And equally as grateful to see those two get canned. As they left with their checks and their tales between their legs, one of the salesmen yelled out, “Hey! I’ll give you both $5 to wash my car!” The showroom erupted into hysterics!

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Is There a “Best Time” to Buy a Car?

When is the best time to buy a car? The end of the month? Not necessarily. If you happen to get a salesman who’s already made his quota for the month, he’s not motivated to give you a rock bottom price. He’ll do everything he can to “hold the gross” on the car because his paycheck depends on his commissions.

And if he’s already made his quota that means he’s already made his monthly bonus. So why would he sacrifice his commission on the car he wants to sell you? That’s more icing on his cake. So what he’ll do is hold the gross on the selling price and “smack talk” you into believing he’s cutting you the best deal ever. But if you get a salesman who needs to meet his quota, he’ll hammer away on you to get the sale in the bag. Who wins here?

How about the end of the model year? New models are hitting the showroom and the dealer has to sell all the remaining cars of last year so he can order enough of the current models for inventory. So you’ll get a screaming deal on last year’s model, right? Maybe. But the era of deep discounts on “left overs” is rapidly disappearing. And unless the new model year is vastly different from last year’s, don’t count on it.

Another thing to consider is the amount of last year’s inventory a dealer has by September. What you don’t know is that usually dealers can’t order any more current model cars after the end of April. That means whatever comes in during May and June is all he’ll have in stock. And that has to hold out until the new models arrive in late August or early September. So your choices of color and options will be severely limited.

Try shopping in the middle of the afternoon on Monday through Wednesday. You’ll most likely get personal attention, not be rushed, and a salesman eager to make a deal on a slow day. And that means a decent discount without all the back-and-forth haggling.

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Friday Funnies for March 9

Getting even is so much fun when the victim is another salesman you work with. From time to time we pull stunts on each other. All in good fun because it’s against someone you like, not one of the arrogant, cocky, know-it-all salesmen that we and customers despise. The reason we don’t pull anything against the arrogant ones is that since they repulse us so much, it would easily get out of hand.

One afternoon another salesman asked me to come out and explain something under the hood to his customers. I gladly did. And that salesman turned to his prospects and “accidentally” hit the prop rod that holds the hood up. The hood crashed down on my head! Now it was a subcompact car so the hood was very light weight and it didn’t hurt. But I resolved to get even … and I did!

On a very warm day he was outside showing a car to some customers. They all walked inside to his desk. Just before he sat down, I casually strolled by and tossed a piece of slightly melted Hershey’s chocolate on his chair. It couldn’t have landed in a better place if I had planted it there. The salesman sat down on it. And I waited until he got up to get them coffee.

When they saw that stain on the back of his pants, I held up the Hershey’s wrapper for them to see. I thought they’d fall off their chairs, they were laughing so hard. And that made others in the showroom take a look at what was causing the commotion. Everyone erupted into laughter and the salesman didn’t have a clue as to why. One of his customers let him in on it. I never saw a brighter, glowing shade of red on a person’s face. And I was laughing so hard I was in tears.

Of course, for the next few weeks I carefully approached my desk, looked around every corner, and always looked over my shoulder. And to the salesman’s credit, he completed the sale before he went home to clean up and change.

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“Limited Time” Offer? Don’t Fall for This Unlimited Trick

Red Tag Sale, Tent Sale, 72 Hour Sale, Blow Out Sale! These are just three events geared at bringing you into a dealership. The marketing makes it seem like if you don’t buy a car during this “limited time”, you’ll miss out on the greatest opportunity ever. And it will never happen again.

Don’t fall for it! The discounts aren’t that special. In fact, they’re the same discount you can get any day of the month at the same dealership. The only difference is in the hype and the pressure put on you once you walk onto the lot. These sales gimmicks are designed specifically to move old inventory. Cars that have been sitting on the lot for three months or more. All the newer, or fresh, inventory is also on sale but at a much less discount.
Do you benefit from these sales? No! As I mentioned, you can get the same deal any day, any week, any month of the year. So who profits from them? The dealer and the salesmen. The dealer gets a kickback from the factory on selling old inventory and can order more new replacements. The salesmen get cash bonuses for selling them, with the bonuses increasing with the more they sell. So they will apply much more pressure on you to buy now!

Don’t fall for this hyperbole. It’s nothing special at all. It’s all in the packaging of the sale itself. With no benefit to you, the buyer.

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WALKING OUT

There are many reasons for walking out of a salesman’s office, or out of a manager’s office. Maybe you’ll even start to walk off the lot. But one thing must be embedded deep inside your head to save you from “being put together.” Once you walk out, keep walking no matter how hard we try to entice you to turn back! We’ll call out “Wait! I’ve got an idea!” or something similar to that. We’ll watch you to walk and wait for the right moment to get you to turn around. It’s all part of the master plan.

Salesmen and sales managers expect some customers to walk. So we have a game plan for this. We know we push you too hard at times and you’ll get up and leave. And we know you’re just waiting to hear us call you back and then Bingo!, you’ll get the figures you want. So we do holler out to you. You turn around and listen to the offer. Ahhh yeah, now you’re in control of the negotiations.

But I have a news flash … all this drama is a calculated move on our part. We know that once you turn around, we have you back in our clutches. And we’ll make you believe you’re getting the best of us. But all the while, we’re sticking it to you and you won’t even know it’s happening. You see, you show your vulnerability when you turn back. At that point we know for sure you don’t want to leave without your new car. And we’ll be counting on our huge commission check at the end of the month!

So PLEASE keep this in mind, once you walk off … DO NOT turn around for any reason! Keep walking to your car and drive off! There are so many other ways to get to you besides the monthly payments, your trade-in value, or whatever the stumbling block was. What are they? I’ll explain in the upcoming weeks.

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THE DEALER SWITCH

You walk onto a dealership lot looking for a white V-6 sedan with tan interior and certain options. The salesman knows he doesn’t have one like that. Only a red one with tan interior. With a lot more equipment. So he promptly takes you on a walk around the lot wasting your time. Why? To get you to look at the other colors and get your mind off white and tan. And the options you want.

He doesn’t have the combination you want so he’s going to try to stick you in one he does have. It’s the old “Sell what’s on the lot” dictate, working together with the “Don’t let anybody walk”. You’re set on white with tan and must-have options. So hold out for it. Don’t take anything else. If you feel you’re being badgered or deceived, walk out! Find a dealer that either has something close or exact to what you want. Or find a decent salesman at your local dealer who is willing to either do a dealer search for you and trade for it, or have you special order it.

And if you can get a dealer trade going for the car you do want, always demand to know what they charge for it. Be sure it’s a reasonable fee. If the other dealer is less than 25 miles away, you shouldn’t have to pay more than $75 to cover all the paperwork and man-power involved. Remember, the dealer trade fee is negotiable!

Shoving you into a car with either less or many more options than you want, in a color combination you don’t want, is the job of every blue-suede shoes salesman and dealership. You need to walk out of there as fast as you can and save yourself heartache and grievous buyer’s remorse.

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