
129 Cars - cpymchn
http://www.thisamericanlife.org/radio-archives/episode/513/129-cars
======
johnthedebs
I listened to this podcast the other day and it was one of the more compelling
This American Life episodes I've listened to recently. I say that as a pretty
big fan of TAL.

They spend the episode interviewing car salespeople and managers at one
particular dealership over the course of a week (IIRC), where the salespeople
are trying to rack up a certain number of sales to qualify for a bonus payout
that means the difference between being in the red vs being in the black. They
clear up some myths about car sales and generally get to the heart of what
it's like to be a salesperson.

The things that were interesting to me were the various mindsets and tactics
the salespeople use to sell a car, especially when they're desperate. The way
the salespeople negotiate between two different parties – on one side with the
customer, on the other side with their manager – was also something I hadn't
thought about.

That's about the gist of it: a week in sales during a somewhat desperate
situation from a car dealership's perspective. As a semi-regular podcast
listener who really likes TAL but feels like they have some hits and some
misses, this one is definitely a hit.

~~~
yitchelle
"The way the salespeople negotiate between two different parties – on one side
with the customer, on the other side with their manager"

This is what really struck at me. I was really surprise at how isolated a car
sales guy is, even within the same dealership. It truly is every guy for
themselves.

Is this situation ripe for a disruption?

~~~
ryanmarsh
It is very ripe for disruption and has been for decades. The entire model (as
other commenters have stated) is protected by law at the behest of a special
interest lobby.

I sold new cars for a while. The dealer really should just be a showroom
staffed by manufacturer sales people with perhaps some bonus structure.
Instead it's filled with middlemen whose children will only eat if they can
convince you to pay more for the car than a more efficient market would allow
for.

If you watch the movie "Suckers" you'll understand the "asshole" culture of
car sales. Unfortunately it's really that way because you have to be an
asshole (a taker) to survive.

~~~
alexeisadeski3
Even without legal protection, it's likely that buying a car would remain a
confrontational experience.

We negotiate over cars because the price is sufficiently high that it's worth
it to pay an employee who's sole job is to wiggle that extra 5% out of you.

Other examples of items we negotiate the purchase of include pianos, heavy
industrial equipment, home repair and maintenance, and myriad commercial
products and services. Hardly any of these are "protected" in a similar
fashion to car dealers.

Further evidence in support of this theory is the trend in poorer countries to
increase the number of items with negotiated prices: As the wages of decent
negotiators fall, it makes more sense for a business to hire them and thus
improve margins.

------
rallison
A quite enjoyable and interesting piece by TAL. One aspect that I found
interesting is that Manny, the guy inspired by Sun Tzu and without much
inherent interest in the cars themselves, actually fared poorly in sales [1].

This sort of salesman is exactly the sort of person I always want to avoid
when I am looking at purchasing something, so I am glad to see his techniques
were not all that effective.

Overall, the piece doesn't paint the dealership model in a very positive
light. While it makes one sympathetic to some of the individual salesmen (at
least, to some extent), it also largely reinforces many peoples' assumptions
that, mostly, they are prey when they arrive at a dealership, unless they know
what they are doing (or, if they happen to arrive at the end of the month
during a poor sales month and happen to be slightly stubborn).

A related note: I'd love to see more car sales go the way of Tesla and Saturn
[2] (yes, Saturn), where pricing is much more transparent/fixed. Basically, I
find the current dealership model's incentives to be largely mismatched to the
actual needs of consumers.

[1] (~10 cars per month) [http://www.thisamericanlife.org/at-the-car-
lot/](http://www.thisamericanlife.org/at-the-car-lot/)

[2] [http://knowledge.wharton.upenn.edu/article/saturn-a-
wealth-o...](http://knowledge.wharton.upenn.edu/article/saturn-a-wealth-of-
lessons-from-failure/)

~~~
mschaef
> Basically, I find the current dealership model's incentives to be largely
> mismatched to the actual needs of consumers.

Agreed... the current negotiation model seems guaranteed to ensure that the
customer walks away feeling screwed. If you buy, there's always that lingering
worry that there was money left on the table.

~~~
revelation
Just because the car dealership isn't making money doesn't mean you are not
being screwed anyway.

------
rosser
Relevant: [http://www.edmunds.com/car-buying/confessions-of-a-car-
sales...](http://www.edmunds.com/car-buying/confessions-of-a-car-
salesman.phtml)

~~~
larrydag
Best I've ever read on the auto dealership industry.

------
canadev
That was so intense... I was stressed from the very beginning.

There's a lot to be said for a stable paycheck.

Personally, I only buy used cars and pay cash. But if I didn't, I know that
I'd be buying my car at the end of the month...

If you listen to this, don't forget to to look at the photo gallery. I waited
till after I'd finished listening to look at it, I think that worked out well.

------
anonu
This episode was definitely very well done. Made me think about how Tesla is
subverting the traditional dealership model by opening up their own
salesrooms, despite strong opposition from these dealers. I wonder who will
prevail in a world where price comparisons are instantly done over the
internet. The podcast even highlights the fact that profit margins have been
squeezed because of this.

------
stevewillows
My Dad has sold cars for as long as I've known him. He was a top salesmaster
for GM for several years in Canada.

The interesting thing I found each this podcast is how consistent it was with
the stories he'd tell us over dinner. We always thought he was just having a
tough time with poor management, but it seems that he's not alone. Since
moving to fleet many years ago, the dealer would often sell cars at a loss so
they could not only hit numbers to be ranked #1, but also for the incentives
from the manufacturer.

One thing the show left out is the unbelievable amount of paperwork involved
in quoting someone an accurate price. Also, the amazing shuffling of cars that
goes on between dealers. With certain models only being built for a short
period of time, the custom orders take hours and hours of hunting and pecking.
On the consumer side it feels like I ask for a bunch of stuff for my car and a
week later it shows up as expected.

As others have noted, this is an industry primed for a major disruption. The
tools most car salesman use on a daily basis haven't really progressed since
they left typewriters.

The other major struggle for the industry is that a lot of salesmen have been
salesmen their whole lives and don't want to retire. Thus, there's an office
full of 70 to 80 year old hanging around while the other half runs ragged to
make a few hundred bucks.

~~~
Maven911
Could you give an idea what kind of money top salesmen got and what was the
commission and bonus structure like

~~~
stevewillows
He wouldn't give up numbers, but the numbers aren't great considering the
amount of work to be done.

I think a top guy these days would clear 150 in an unbelievable year and
closer to 70 on an OK year. This said, a lot of guys make 40 and struggle.

This industry would benefit from a huge bear hug from the tech industry - - -
as I said before, the amount of effort to get quotes is a lot, and as a result
a lot of sales guys end up pushing paper for their 80%.

------
bane
Car salesmen can be interesting people if you get them to drop their guard a
bit and chat. A surprising number of them are simply transiting through car
sales to make ends meet between their main career. In a rough economy, car
sales is almost always a way to get a short-term job.

Of course the negotiation part is annoying and time-wasting. I suppose for
every person that gets a good deal, 10 get a bad one and that's why it lasts.
It's also one of the reasons why CarMax and Costco Auto are extremely popular
even if the price you pay isn't necessarily the best possible you can
negotiate. Buying a new car can literally take an entire day, and not dealing
with the negotiation bullshit can save _hours_ off of the purchase experience.

Also, negotiations don't end with the salesman, you can negotiate quite a bit
during financing. You can usually get a lower rate if you buy all sorts of
warranties and other cancelable agreements. Then go home and cancel those
agreements immediately (it's not easy, they make it very hard to figure out
how to do it). Over the lifetime of the car loan it can save you thousands of
dollars in interest payments.

~~~
mitchell_h
I grew up around (mostly large, high volume) car dealerships. Dad was a
mechanic and was friends with the sales folks. Car sales people come in two
flavors, the career guys. These are the guys that know cars and what gets
people to buy them. They make good money(knew one guy that was over 300k/yr,
he was an extremely rare dude.). This is the vast majority of the guys you'll
see in large dealerships now days. The sales person competition has simply
weeded out the less than stellar sales people, dealers can't afford to have
them around the sales floor.

The second is the transients you're talking about that just move through
dealerships because they think it's quick money. Now days these guys are
mostly at the buy-here-pay-here places and lower end dealers.

As for negotiation....it's just not like it used to be. Used to be the sales
guy could get you a ton off and various other perks like warranties and detail
jobs and shit. Now days the sales guy can do some of that, but in the end the
big saving for consumers is in the financing office. If you're willing to
spend the time you can save big big money by working with/against the
financing agent. Note; paying cash is almost always a bad idea when buying a
car. The rebates banks offer are HUGE and you're not going to get them by
paying cash.

~~~
bane
> Now days the sales guy can do some of that, but in the end the big saving
> for consumers is in the financing office.

Yeah, it's astonishing how much the car will cost you after you pay everything
off through the loan vs. the agreed upon price. A 10% interest rate on a 5
year $30,000 car loan costs $8,244.68.

It's not uncommon for people with so-so/bad credit to get rates in the 20+%. A
22% loan on $30k over 5 years costs almost another $20k! That's like buying an
entire extra car!

------
rokhayakebe
This is me at a used car dealership Wednesday, the 1st.

HIM: $13,999

ME: $9,500

HIM: Oh no no no no.(click click click - on his computer). Ok ok, this is what
I can do for you $13,499. I take blah blah

.... 5 minutes later ...

HIM: Ok $10,000 and that is my final.

ME: $9,500.

In the end I didn't buy it. It's just amazing how we shaved $4000 off in less
than 5 minutes. This industry needs to be regulated.

~~~
fsckin
That doesn't sound like a negotiation.... if you had started at $9,000 and
come up $500 at the end you might have gotten it.

~~~
dnissley
But why? It's the same number in the end. Is my willingness to play this type
of game worth $500 to the sales person?

~~~
functional_test
It shows good faith. It shows your willingness to negotiate.

You can go through life upset that the world doesn't work the way it "should"
\- you can even refuse to participate like the original poster. But you will
generally have a worse outcome, so is it worth it? Why not play along, just a
little?

Same thing goes for: dressing up (why should it matter if I'm in a suit?),
sending thank yous (why should it matter if I already said thank you?), and
just about any other social grace.

~~~
sejje
I don't think this matters as much when dealing with a professional
negotiator. He has less feeling involved.

With a private party, I agree with you.

------
Aardwolf
"NOTE: the Internet version of this episode includes un-bleeped curse words."

Are there really people who care?

~~~
harpastum
Certainly. One simple example would be a teacher who wanted to share an
excerpt with her classroom. Listening to the standard bleeped version on the
radio and then accidentally sharing a version with profanity to the students
could cause a lot of trouble.

------
peterjancelis
1\. Why did they start buying cars themselves well before the deadline on the
last day?

2\. Why didn't they push delivery of the 130th vehicle to the 1st of next
month?

~~~
dangson
I bought a car recently and I can tell you if I've gone through all that
paperwork and haggling, I want my car that night. There's no way I'm waiting
until the next day to get my car just so some dealership can get a head start
on its quota.

------
jap
I don't understand why the general manager didn't wait till the last minute to
book the dealership's two loaner car purchases.

~~~
giarc
When you go to your sales team and the new goal is 7 rather than 9, morale
gets a boost and you try a bit harder to sell those cars. The goal is closer
and within reach.

------
yread
I can't listen to audio. Why is it interesting?

~~~
AVTizzle
"One of the best podcast episodes you'll ever hear about selling software.
Actually about cars. Stick with it."

[https://twitter.com/patio11/status/418879954894340096](https://twitter.com/patio11/status/418879954894340096)

~~~
patio11
To substantiate that, if the only thing you got from the interview was the
mindset for dealing with customers who are not ready to purchase ("Let's go
over this: they are _in a car dealership_..."), it is worth it.

Next time I have a call with a purchasing officer for the County of
Springfield (not actually my last call) I'm going to say "Remember, Patrick,
nobody ever sent an email to the CEO of an appointment reminder company just
because they were feeling lonely and wanted someone to talk to."

~~~
praptak
> "Let's go over this: they are in a car dealership..."

Yet another reason why physically going to a dealership seriously weakens your
negotiation position as a buyer. Mail, phone or fax multiple dealerships and
do not enter one before getting a good offer.

~~~
chrisbennet
Something I read in a book about buying cars once: If you go to the dealer,
test drive the car, etc. (basically take up some of the salesman's time) you
can negotiate a better deal than if you just walked in or called and said
"This is my price, take it or leave it."

The reason this works is because the salesman has a "sunk cost" in dealing
with you for the last half hour and is reluctant to let that time be wasted by
refusing a sale.

~~~
notahacker
A competent salesperson (a category which probably excludes many car
salespeople...) doesn't fall for the sunk cost fallacy, but they - and their
manager - _might_ still be more inclined to offer the deepest possible
discount if you've spent the last half-hour actually showing a genuine
interest in buying a car, not least because by that stage there's little more
they can do to influence your perception of the value of the car.

------
Maven911
Does anyone have any other good american life episodes ? I love shows where
they intersect business, operations and people issues.

------
natural219
This sounds awesome, but I cannot for the life of me understand why the
Podcast feed for This American Life only contains one goddamn entry. Who uses
this shit? What is the point of a podcast if I can't download it in my podcast
software of choice on my home Wi-Fi network and listen to it at my leisure?

Am I missing something with a typical podcast workflow? Because this makes
zero sense.

~~~
ientropic
They used to be downloadable, now you can pay to listen at your leisure... or
pirate it..

~~~
natural219
I would love to pay them for their content, but they only have an iTunes
option. iTunes? Seriously? What is this, 2002?

~~~
recursive
Is iTunes not cool anymore? How are cool people distributing audio?

------
lazyant
a salesman is walking with a customer in a dark lot trying to find a
particular model? don't they have updated inventory?

