

Confessions of a Car Salesman (2001) - jeremynixon
http://www.edmunds.com/car-buying/confessions-of-a-car-salesman-pg2.html

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jhspaybar
As someone who was a car salesman for 8 years, this was surprisingly accurate.
Normally these style articles are just hilariously wrong, but I was impressed
by the accuracy here. I will say though, the profit levels that Edmunds and
other companies suggest just aren't levels a salesperson can survive at. Most
dealerships have a minimum commission around $100, and if you're buying the
car at the prices you see recommended online, that is all the salesman will
make. Increased profit is often a question of survival. If you know you're
only going to sell 10-12 cars a month on average, they can't all be for $100
commissions or you're going to starve. Even the "unfair" deals, where he made
$300-$500 from a sales persons perspective is about as low as they want to go.

I think there really does need to be some kind of change to the process here,
sales people just literally cannot survive on what Edmunds would consider a
fair price. As a sales person though, I can't tell you how many times someone
had a fair price worked out before coming in to the dealership and then
expected to negotiate more. Most people just seem to expect it, so you're in a
weird limbo land where it's difficult to A sell a car to most people without a
big negotiation, and then at the end the same people complain they have to
negotiate, but had you just given that price up front, they never would have
bought. Lots of interesting psychology :)

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bradleyland
The question I'd ask is, why do I need the salesperson at all? I know exactly
what I want when I buy a car. For my last two cars, I sourced and specified
the manufacturer option codes for my order.

The role of a salesperson is to convince someone to buy a product. If I am
already convinced, why should I have to involve this person in my
transactions?

~~~
ryanmarsh
You don't, the dealer does. I sold cars for a short while. The dealer makes
money by introducing a spread between what he paid for it (minus bonuses) and
what you'll pay (plus financing). They are middlemen pure and simple,
something information technology is exceptional at deprecating. The reason the
major brands don't have company stores like Tesla is manufacturers don't have
to hold as much of a risk with inventory and dealers are well lobbied.

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Agustus
The main issue here is the lobbying component of the dealerships. A lot of
states have mandatory purchase the car from the car dealer mandates, thereby
requiring a system in which the dealer makes enough money to continue their
efforts.

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justincormack
The rest of the world has car dealerships too, and as far as I know has no
mandatory purchase rules. As far as I can make out car dealers make so little
money in Europe that it is not worth disintermediating them, but I may be
wrong.

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mericsson
If you enjoyed this, worth checking out This American Life episode: 129 Cars
[[http://www.thisamericanlife.org/radio-
archives/episode/513/1...](http://www.thisamericanlife.org/radio-
archives/episode/513/129-cars)].

~~~
tempestn
Thanks; I enjoyed it. Also, it was interesting that the writer of this
Confessions series worked as a car salesman and ended up no longer blaming the
salespeople for pushy tactics etc., but rather the sales managers and
dealership owners. Listen to that podcast and you come away feeling that those
people are in basically the same boat, under pressure from the manufacturers.

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rdl
Lots of good arguments against buying a car (esp in cities) or buying a gas
car (tesla) or buying a new car from a dealer (massive depreciation), but
there are cases where it makes sense.

The key is to be an informed buyer, and to break out separate parts of the
transaction and analyze them individually.

Financing from your credit union, in the absence of a manufacturer-driven
promotional financing rate, is going to be better.

You'll get more for your car selling it on Craigslist or whatever (although,
more hassle).

Various services exist to negotiate fixed discounted prices for cars
themselves: costco, usaa, etc. Founderscard has an audi MSRP discount, too.
You might be able to do better negotiating in person at a dealer if you know
the structure of manufacturer incentives -- sometimes selling a car at a loss
makes sense because it pushes them over a threshold -- but that's a lot harder
in a place like the Bay Area and for popular cars (VW TDI when gas was
expensive, audi and bmw now).

The great deal that was the certified preowned seems to have become popular
enough that it's no longer such a deal.

I really hope my car lasts me another 2-3 years; either get a Tesla then, or a
535d in Germany.

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jpatokal
See also the 2009 edition: [http://www.edmunds.com/car-buying/confessions-of-
a-car-sales...](http://www.edmunds.com/car-buying/confessions-of-a-car-
salesman-updated-for-2009.html)

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ssharp
The most egregious cost with these cars is not the thousand or two over in
profit to the dealer, but rather the massive depreciation over the first two
years. That's a substantial expense that almost everyone overlooks and one
that can be easily avoided but just buying something a few years old.

~~~
ghaff
Eh. Certified Preowned and various information sources have reduced a lot of
the information asymmetry risk of buying late model/low mileage cars and
therefore what was effectively a risk premium has shrunk as well. I'm not a
particular expert and doubtless there are individuals who get good deals if
they put in a lot of legwork and buy from individuals. However, when I've
looked, at least used cars from dealers weren't any particular bargain.

~~~
ssharp
Dealers don't list their used car prices at attractive prices, but they will
come down. From the research of done when buying our past two used cars (in
2013 and earlier this year), the information asymmetry was still plentiful.
Dealers get cars from auctions, off-lease, trade-in, etc. You have no idea
what their cost actually is, unlike with new cars.

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wheelzr
I was a "online sales director" for a small chain of new and used cars for
about a year.

Never buy a car new unless you have to. If you're buying the car new you
shouldn't focus on the purchase price, but the value for your trade in and
your APR.

Most used car sales generally only brought in $1,000-$3,000 in profit. The
dishonesty in the business doesn't revolve around the pricing, it's in the
details of the cars. Salesmen will lie about resale values, maintenance
records, previous owners and so on.

My advice is to identify 2-3 cars you'd like and then buy that car with
30K-50K miles on it no more than 3-4 years old. You'll still be able to get a
low APR, and you'll have cashed in on a car that will hold it's resell value
better than a brand new car.

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ilikepi
Previous discussion:
[https://news.ycombinator.com/item?id=3779735](https://news.ycombinator.com/item?id=3779735)

It is an interesting article, even though things may have changed since it was
published.

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rickeydidio
I sold cars for a month back in my early 20s. This article is spot on, right
down to the training class and not knowing how much you REALLY make on each
deal. Half of the customers wouldn't qualify and the other half didn't realize
how math works so you can't get a $30k car for $300 when you are $2000 upside
down on your trade with no money down.

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IgorPartola
I wonder how things have changed in the last 14 years. I bought a car a couple
of years ago, and the "Internet price" is now a thing. I found it harder to
negotiate numbers since now "no haggle" means that they have the same high
prices as "haggle" places, but are just not willing to go lower on them.

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jpatokal
Oddly, the "carsdirect.com" mentioned here has evolved into Internet Brands, a
media behemoth that owns a whole bunch of forums.
[https://en.wikipedia.org/wiki/Internet_Brands](https://en.wikipedia.org/wiki/Internet_Brands)

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georgeoliver
I've never bought a car from a dealer. Has the Internet affected car selling
very much since this article was written? The author mentions the beginning of
some trends like with carsdirect.

~~~
petersouth
It's very frustrating, I bought three over the last couple years. I think the
biggest help to consumers is TrueCar.com which basically uses the information
they gather about prices people recently paid for cars to negotiate a fair
price for both parties. Whenever I mentioned TrueCar the salesmen were kinda
disappointed because they knew they couldn't squeeze any extra money out of
you. I started a website to help people get good deals on cars and then just
decided to quit because TrueCar was efficient enough. Even the dealers that
didn't participate still respected their pricing. At that point it was just a
question of making sure not to get screwed on the financing and trade-ins.

~~~
scrapcode
I had never seen TrueCar.com. Thanks for that. I bought my first new vehicle 4
months ago and have felt like I got screwed every since. Turns out, I actually
got a decent deal.

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jostmey
Can someone summarize the secrets to me? I noticed the article was 11 pages
long.

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ghaff
I'd probably word grecy a bit differently. As much as possible, separate the
purchase from the financing from the trade-in. Easier said than done for some
to be sure, but get an idea of alternative payment options if you don't have
the cash or existing line of credit. And know what you'd be willing to take
for a trade given what think you think you could get for the vehicle on
Craigslist or donating it. And, of course, have your max price for the vehicle
in question given invoice price and other factors.

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tmuir
One thing to keep in mind, if your trade in has significant value, is that
your trade in amount reduces the tax you pay on the new price. For example, if
you buy a $25000 car, and have a trade in value of $10000, you only pay tax on
$15000.

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ghaff
Good point. In my case, I basically only buy a new car when the old one is on
its last legs so we're talking about $1K-$2K at most.

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junto
Anyone know if there is an Edmonds.con variant in Germany?

