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  #1  
Old 10-20-2014, 02:09 PM
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New Car Sales - sure has changed.

Back in the day, every new car sales professional was given a demonstrator. Some dealerships would sell over six demonstrators a day. The demonstrator allowed a new car sales professional the opportunity to learn the car and be seen in the car. It was a good time to be in new car sales. EVERYONE at the dealership was making lots of MONEY.

I was recently checking out the new Porsche's. I struck up a conversation with the Porsche salesman and asked him a few questions about his own personal cars. Yes, he owns several sports cars, NONE of them a Porsche!

I have a friend who worked at a new car dealership selling cars. She averaged 15 - 20 car sales PER MONTH. They were paying her $100 commission per car. Some deals would take her two to four days to complete. Amazingly, she is no longer in new car sales. Wonder why?

Yesterday I went on youtube checking out the new Teslas. One video featured an official Tesla sales professional conducting a test drive with a prospect. Halfway through the test drive, the prospect asked the sales professional if he OWNED a Tesla. Response: "No, I don't own one but my roommate lets me drive his Tesla." Huh????

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  #2  
Old 10-20-2014, 02:42 PM
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The entire dealer business model is screwed up from the beginning (see laws banning tesla sales, etc). Giving each of your employees cars gets pretty expensive pretty quick...lots of liability in a business where a lot of people last a few weeks...


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  #3  
Old 10-20-2014, 02:57 PM
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All the "Sales Professionals" in the car business have moved on to other things. The internet has made them obsolete, and its hard to make more than a minimum commission on sales.

At most dealerships, there will be 1 or 2 salesmen that have been there forever with a huge repeat and referral clientele and are the first ones to show up and last ones to leave every day. 60 hour work week minimum. They get 80% of the sales. The other half dozen or more salesmen are young and inexperienced or bottom feeders and will wash out within 6 months. You will know more about the car than the salesman, who will be nothing more than a go-between for the manager.

Margins are thinner than ever on new car sales. The money is in wholesale (reselling trade-ins). You see most large car lots now have more used inventory than new. Still, the sales side of new dealerships has been struggling for 10 years now.

What has put dealerships wayyy in the black is service. Mark up on parts and labor is hitting astronomical rates and a cash cow for dealers. With cars getting more and more complicated, the dealer doesn't have to worry about competition from independents who don't have the diagnostic and special tools to properly repair their vehicles.
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Old 10-20-2014, 10:18 PM
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Which drives people to buy more vehicles since fixing them is so costly out of warranty. This lets the dealer sell more used, new, and highly profitable aftermarket warranties.

Or they can do a BMW sales model and sell all of their new cars twice, and finance them twice!

The cash buyer who writes a check for a new vehicle and leaves isn't a good customer...
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  #5  
Old 10-22-2014, 05:11 PM
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It does appear that living off the back shop is becoming more the norm. As for dealership total markups on new vehicles. I have no ideal of their rebate percentage on volume of sales.

This from the manufacturer paid once a year. I do see many ploys attempting to get the manufactures suggested list price constantly improved or enforced.

Some of the trade in allowances reciently tend to indicate there may still be a reasonable overall margin on some brands when new. They gave a friend of ours twelve grand for his Honda when I thought the resale value was substantially less to get the new sale for example.
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Old 10-22-2014, 09:24 PM
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Dont forget about "conquest money" when switching between car brands (I.E. Toyota to Ford) that comes from manufactures.

~Nate
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  #7  
Old 10-22-2014, 09:37 PM
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Quote:
Originally Posted by Hatterasguy View Post
The cash buyer who writes a check for a new vehicle and leaves isn't a good customer...
The idea that "cash talks" is a thing of the past. This is what happened to me when I tried to buy one. They just didn't want the sale.
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  #8  
Old 10-22-2014, 10:52 PM
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You are far better off not to not imply cash. They may lose finance rebates and so called administration charges to get processed. Unless the manufacturers give the dealers nothing now. The only advantage of cash seems to be on one or two year old cars where the average buyer is better off to buy new with so called zero interest. It does cost someone to discount the dollar amount to move that paper above the dealer level.

Financing a one or two year old car will cost the customer more than new at conventional rates usually. So those vehicles are harder to sell unless reasonably discounted. We paid 13,500 for a one year old Toyota corolla with automatic and air. Getting close to a year ago. It had 8,000 kilometers or about 4,800 miles on it and was spotless. Actually there was another accessory package on it but not worth that much as well.

The normal retail for that model new with what it has is approaching 20k In Canada. So a reduction of maybe 6500 for someone else driving it 5,000 miles in a year was not a bad tradeoff. The sales tax at 15 percent here was also close to 1,000 dollars less as well. So we looked at it as about 7,500 less than new. It took a little haggling.

What it amounts to is the cars with good resale value later are available fairly new at substantial discounts. Of course we lose any earnings the money spent in this fashion would aquire. So in a more solid economy if a cash discount that dealers offer through the manufacturer is available. You have to do the math as to be pretty certain if putting the money to work in decent investments can generate gain is better or worse. After taxes of course.

My wife might drive that car for five years and see almost ten thousand back as she does not put that many miles on a year. I usually just put a sign in the window. Well maintained car owned by an elderly lady driver with the total miles on the sign for whatever price I think it will bear and it is gone pretty quick. Basically newer cars do not have to cost an individual much if you apply some methology to the problem. Nothing is free but you can do better than the majority with some effort and thought. I found that the total newness effect with brand new cars is too short to consider much. This will vary with individuals. It has a heavy price though.

Sometimes it will pay off to finance. On that basis we may have acquired that car new for far less than the twenty grand. I just was uncertain what the investment economy was going to return then. Right now I am also a little concerned after the last run up and small recient decline.

I figure the government will support the market right now as I doubt the present economy could stand a major decline in investment vehicles presently. Many older people like ourselves have too much money sitting in safe financial vehicles that do not even really keep up with real inflation as a hedge. This has to be really pissing off wall street. It does the same with us. Greed eventually nails too many people though at the same time.

Last edited by barry12345; 10-22-2014 at 11:36 PM.
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  #9  
Old 10-22-2014, 11:59 PM
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Originally Posted by barry12345 View Post
Many older people like ourselves have too much money sitting in safe financial vehicles that do not even really keep up with real inflation as a hedge. This has to be really pissing off wall street.

And I've wondered more than once if interest on safer investments is kept low in order to flush out the older crowd....get 'um back into equities.

The rules of economic academia control interest rates, but ya gotta wonder....
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  #10  
Old 10-23-2014, 09:47 AM
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Your post starts out with back in the day. I wouldn't be surprised if the IRS, and state agencies didn't want to start taxing the use or depreciation as income to the sales person. Some money grabbin pol may have determined that a brand new car that sells for say 20K is a 17K car as a demo unit, therefore taxing bodies just lost out on the sales tax. I had a fishing boat years back that I would occasionally charter out and my accountant said do it on a cash basis only or the IRS may come after you for any time that I used It personally at the same rate as I had chartered it for.
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Old 10-23-2014, 09:49 AM
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Your post starts out with back in the day. I wouldn't be surprised if the IRS, and state agencies didn't want to start taxing the use or depreciation as income to the sales person. Some money grabbin pol may have determined that a brand new car that sells for say 20K is a 17K car as a demo unit, therefore taxing bodies just lost out on the sales tax. I had a fishing boat years back that I would occasionally charter out and my accountant said do it on a cash basis only or the IRS may come after you for any time that I used It personally at the same rate as I had chartered it for.

Uh...what?


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Old 10-23-2014, 10:08 AM
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Uh...what?


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Read the post. I was generous with a three thousand dollar depreciation from new to demo vehicle. Most vehicles loose 5 grand when rolling out the dealership. The taxing bodies want all of the money they can grab, and that is a huge loss to THEM IN THEIR EYES. Someone would need to pickup the difference in cost from new to demo sales price, at least the sales tax on the cost, and as seen by them a financial benefit to the user.
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Old 10-23-2014, 10:10 AM
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Read the post. I was generous with a three thousand dollar depreciation from new to demo vehicle. Most vehicles loose 5 grand when rolling out the dealership. The taxing bodies want all of the money they can grab, and that is a huge loss to THEM IN THEIR EYES. Someone would need to pickup the difference in cost from new to demo sales price, at least the sales tax on the cost, and as seen by them a financial benefit to the user.




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  #14  
Old 10-23-2014, 10:34 AM
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Originally Posted by sloride View Post
Your post starts out with back in the day. I wouldn't be surprised if the IRS, and state agencies didn't want to start taxing the use or depreciation as income to the sales person. Some money grabbin pol may have determined that a brand new car that sells for say 20K is a 17K car as a demo unit, therefore taxing bodies just lost out on the sales tax. I had a fishing boat years back that I would occasionally charter out and my accountant said do it on a cash basis only or the IRS may come after you for any time that I used It personally at the same rate as I had chartered it for.
Back in the day, a demonstrator was provided to the new car sales professional for two reasons:

1. The new car sales professional would have a current model/year vehicle to use to take prospects on test drives in hopes of selling either the demonstrator or a new car. It wasn't unusual for a competent new car sales professional to sell three demonstrators before noon.

2. Providing the new car sales professional with a demonstrator gave him/her a sense of ownership in the brand (Ford, GM, etc.). They were seen driving a new car of the same brand they were selling when out shopping at the grocery store as an example. If they were selling Fords and their PERSONAL car was a Chevrolet and one of their customers saw them at the grocery store driving a Chevrolet, their credibility was SHOT to HE**.

I personally experienced this recently. I took a test drive of a new Mercedes Benz. After the test drive, I had to ask the sales professional for their business card (The FIRST thing you do is give the suspect/prospect YOUR business card as you introduce yourself - the suspect/prospect should NEVER have to ASK for your business card). After the test drive I asked the sales professional which model Mercedes Benz he drove??? Answer: "I don't own a Mercedes but I hope to one day".

Back to your statement; if the sales professional quits/resigns or gets fired, the demonstrator is returned to the dealership. The use of the demonstrator is nothing more than a sales tool so the sales professional can sell more cars. It doesn't represent "income" to the sales professional because if they quit/resign or get fired, the demonstrator is returned to its rightful owner, the dealership. Of course, the sales professional may negotiate a great price on a purchase of the demonstrator if they wish. If they purchase the demonstrator the car then becomes THEIR personal ride and should not be used in business.

Last edited by HuskyMan; 10-23-2014 at 10:51 AM.
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  #15  
Old 10-23-2014, 10:55 AM
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Originally Posted by HuskyMan View Post
Back in the day, a demonstrator was provided to the new car sales professional for two reasons:

1. The new car sales professional would have a current model/year vehicle to use to take prospects on test drives in hopes of selling either the demonstrator or a new car. It wasn't unusual for a competent new car sales professional to sell three demonstrators before noon.

2. Providing the new car sales professional with a demonstrator give him/her a sense of ownership in the brand (Ford, GM, etc.). They were seen driving a new car of the same brand they were selling when out shopping at the grocery store as an example. If they were selling Fords and their PERSONAL car was a Chevrolet and one of their customers saw them at the grocery store driving a Chevrolet, their credibility was SHOT to HE**.

I personally experienced this recently. I took a test drive of a new Mercedes Benz. After the test drive, I had to ask the sales professional for their business card (The FIRST thing you do is give the suspect/prospect YOUR business card as you introduce yourself - the suspect/prospect should NEVER have to ASK for your business card). After the test drive I asked the sales professional which model Mercedes Benz he drove??? Answer: "I don't own a Mercedes but I hope to one day".

Back to your statement; if the sales professional quits/resigns or gets fired, the demonstrator is returned to the dealership. The use of the demonstrator is nothing more than a sales tool so the sales professional can sell more cars. It doesn't represent "income" to the sales professional because if they quit/resign or get fired, the demonstrator is returned to its rightful owner, the dealership. Of course, the sales professional may negotiate a great price on a purchase if they wish. If they purchase the demonstrator the car then becomes THEIR personal ride and should not be used in business.
In your eyes, and mine that is how it is seen. in the eyes of the money grabbers it is a different story. That is why I started my post, with how the original post started with back in the days. Gov't wants to know why a 25K car sold for 20K someone has to pay.

Real Quick scenario:
Model year 2016 Buick ABC. MSRP 25K cost to dealer 20K
Buyer agrees to pay dealer 19K w/ 1K cash on the side for a brand new (called demo) vehicle.
Dealer writes off 1K loss pick but picks up 1K tax free.
Dealer makes a little on financing and hits the Mfg. for some warranty charges while in the demo program (never performed 100% profit)
Buyer got a 25K vehicle for 20K full warranty, saves say 8% local sales tax on say 5K= $400.00 not going to the money grabbers. (They are pissed about that injustice)
Not sure that is why those practices are no longer there but possibly.

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