How Dealerships really work?

My latest Tacoma purchase included me telling the sales staff before we hit the finance office was I would be answering no to every extra they were going to try and sell me. I am up front and to the point when buying, I’m trying to keep as much money in my pocket as I can. It’s true, when they know they can’t sell you all of the extras in the finance office, they rush you through the process real quick.

 

Nice, I declined all the extras too and they tried pretty hard to convince me..

 

I laugh when being offered extended warranties, a Toyota dealership trying to sell me extra protection on a vehicle that probably won’t suffer any major breakdown in the first 80,000 miles, long after I’ve sold or traded it

 

That was the most fun part of the whole experience for me. When they offered me an extended service contract for $3000 I laughed so loud that other customers heard me. They tried to shut me up fast and didn't press the issue anymore.lol

 

I told the salesman when I was buying a Jeep a few years ago about the same thing. Get into the finance office and the guy started trying to sell me all these extras. I told him I didn't want anything and he kept going so I just walked out. Bought my Jeep the same day at another dealership slightly cheaper out the door price and no finance guy trying to sell me anything.

 

Yeah, new car business has about the lowest margins percentage wise out there. Especially lower end cars like compacts. You're working with low single digits margins. They have to rely on service, parts, warranties and volumes to be profitable.

 

Thanks for posting

 

I'd have to bet the sales and finance people get a good bonus if they sell you the extended warranty and finance thru the dealer. They are nice to you until they lose that potential revenue and then bam.... no more mister nice guy.

 

Only "extras" I got were the "lifetime" synthetic oil change because frankly, my garage is full of woodworking stuff and I'm not moving a bunch of heavy tools to pull my truck in there to work on it. Even with me buying my own stuff the $400 I spent on the oil change deal pays for itself in a couple of years.

I also paid about $1000 to extend the factory bumper to bumper warranty out to the end of my loan period. That way if any of the couple-dozen computers in the truck go bad I'm covered while I'm still making my payment. After that I'll just pay out of pocket. By that point I won't be paying nearly as much for things like child care either so it'll be a win-win lol.

 

Honestly I bet you could buy all that stuff and then walk into the dealership a week later and they'd not even recognize you.

 

I had finance guy wanted me to go thru Toyota finance. Three years zero percent, three more years 2.3 percent. 762.00 a month for six years. Wife started squalling about it. I told him I’ve been around along time so there isn’t anything free. Told him the finance was probably built into the cost. He readily admitted it. That’s when I pulled out the checkbook. I wanted the prebuilt interest removed. Oh we can’t do that. Wifey picked up her purse and said we will be on our way to Dallas, we were hoping you would match their offer. Managed to get about 5000.00 off plus 1.3 percent over their cost. What every that is. But paying with a check was nice.

 

If you ever want to watch a movie about buying a car, check out a movie called "Suckers".

 

I've been using Edmonds since '93 when I bought my last new car, but also to negotiate for several purchases for friends. In '96 I helped my neighbor buy a Passat and we figured out the real dealer cost to within about $25 then worked up from there. The dealer asked me how I was able to find out that info and when I told them I did it online, they had no idea what I was talking about and then offered me a job. I politely declined. Ha. What Edmonds never talked about (and they've changed considerably in the last quarter century) are the dealer quotas and what they mean in terms of kickbacks from the manufacturer when the dealer meets a specific number of vehicles. Knowing that you actually CAN get a below cost deal if your timing is right and that sale is going to help the dealer meet that quota, as they're going to more than make up for losing a few hundred or so on a single vehicle.

This time around, and, as I said, it's been 25 years since I bought a new car ('93 Toyota SR5 that went 300,000), given that I've been pretty much overwhelmed with managing my father's estate, I took a different route and went with the Costco buying program. Super painless, no time spent researching. Boom. Done. The Costco pricing on a TRD OR was $800 below invoice plus a coupon for 50% off parts from that dealer. Could I have negotiated a better deal on my own? Probably. But I literally didn't have the energy to do the research even though I would have thoroughly enjoyed beating them up in the process.

The finance dude was kind of a pushy asshole and tried to force me (y'know - I can only offer you this deal today and today only bullshit) into Toyota financing at 2.7% when I knew I could, and did get 1.69% at my credit union. I just told him that his sales bullying would never work on me and that even if my CU's deal had expired I would just pay all cash. It didn't matter to me. I just figure those finance guys are paid to be jerks and I tell them where to go. The Costco sales coordinator, on the other hand, was a pleasure to deal with and when I went a week later to get a part I had ordered, he came running out to say hey. Let's just say I'd much rather deal with an adult there than the pushy 25 y/o punk at the dealer closest to my home.

 

I used to sell cars. First and foremost. There’s not a lot of markup in most cars, vans, suvs, midsize trucks. There’s just not. Usually between 1500-3000. The smaller the vehicle the smaller the margin. I’m not defending any dirt bag car salesman but when you consider than anything under 1000 margin from sale to invoice means your getting 200 buck commission. Above that it’s a percentage for the salesman. Which is why salesman try to get you into more/bigger car. Now... Full size trucks, custom van, custom suv, anything that has a badge on the side as a “special package” can have anywhere from 3000-5000. Full size truck usually always have tons of rebates, special deals, rewards etc etc if you do your homework you can get 5000-9000 off without a lot of work. Dealers don’t make money on selling cars against invoice. They make money from financing and repairs. Also manufacturers have big bonuses for volume. Dealers can make tens of thousands by selling a certain amount of cars and trucks. Example your dealer sells 100 F-150 in a month you get a fat bonus. Now having said all this. To be fair to the salesman. Everyone wants there car dirt cheap losing money bottom dollar etc etc. When I sold Fords anything under 500 dollar margin was called a “biscuit” and I would get 100 bucks commission. A good salesman can move 15-20 cars a month. If all of them are biscuits do the math. No one can live on 2000 a month. So it’s always going to be you vs them. Do your homework. Walk in knowing what you want and what your willing to pay. And don’t screw around. I bought my truck 16 DCSB TSS edition and told them the price and said I’ll buy it right now. I was out of there in less than 45 minutes total. Also don’t buy an extended warranty unless you just always have bad luck. Dealer profits about 70% of that to the dealer or finance manager that sells it.

 

Sure, but the dealer didn’t make the truck. They are just some jackass in the middle between the manufacturer and the consumer. It would be much nicer if everyone could just buy vehicles from the dealer and turn dealerships into service centers. Then the whole archaic process of haggling over car prices could be done away with.

 

There’s a lot going into this actually. Every state has a trade commission that would make it difficult. Next Toyota can not deliver every car to every customer that let’s say “ordered it online” so the manufacturers essentially franchises out the vehicle license just like a subway or McDonald’s so millions of potential customers can looks at all there cars as well as test drive etc etc and have a place for servicing. Manufacturers couldn’t handle that load. Next in an extreme case let’s say the manufacturers say ok we will sell all our cars ourselves then say ok the Tacoma you want that used to be 35000 is now 45000.... end of story. You can’t shop it cuz there is no one to compete with. It’s a worst case scenario yes but one that could play out.

 

Ok that’s funnier maybe this is just funny to me !

 

Manufacturers could do that today, but they don’t for the same reason they wouldn’t do that in the future, people would go buy another brand. Dealers don’t sell at a loss, they wouldn’t stay in business. So you are paying a cut on top of whatever the manufacturer charges, making going through the dealer still a worse option if the manufacturer jacked up the price.

 

I remember when I bought my SR a few months ago. The dealer gave me the price over the phone and it was a sales manager and she wanted to sell TODAY. When I got there I got passed on to someone else. No big deal, I'm only here for the deal and the truck, I don't care if the janitor sells it to me. They have no clue I'm pre-approved for $45,000 and have a 770 credit score. Once they find that out after I explain why I want to use my particular bank, here comes the upselling all of a sudden "what if I could get you into a TRDOR at such and such price". I don't want a TRD, I specifically want the SR. "Well what if we can get you a deal on a TRD". They know they messed up with the price they gave me and thought they were going to make it up on the financing when I came in cause they had no idea I was already approved and for such a large amount.lol I guess they thought an SR was all I could afford and was at the limit of my budget because that was what I specifically inquired about.

 

That’s putting faith in the car makers of the world... More faith than I would give them. I mean why not buy bread from the baker instead of Walmart I mean you could literally say this about everything you buy. Ford gmc Toyota Nissan they couldn’t create and maintain the shear size and scope of having car lots around the world in every city. Just look at manufacturers that have tried and failed. Even as recent as 1998 ford tried to do just this with something called the ford network and it failed miserably. And again different state federal trade commissions and dealer associations that differ by state fight it. Just saying the dealers are not the ones to blame. Manufactures can’t handle the size there companies are now let alone 5000 car lots and the staffing just to go look at there cars.