Frantz - I am speechless at your replies. Spoken like a true shady car sales person. You admitted taking advantage of the used car price. I have done so many deals on car with dealers that I get how it all works. Never have I been taken advantage of after I run all the numbers and know what it should be. You are on crack to think this Raptor is a $34k truck. That is absolutely utterly insane. I can't even believe you would admit that value and be so drastically far away from KBB trade vale AND autotrader tradein marketplace. You have never explained that huge difference. I would NEVER buy from a sleazy worthless snake of a salesman like you. Disgrace to the business. Be fair ON both sides of a deal.
I will HAPPILY use my autotrader tradein marketplace voucher, get my cash, and go buy a new truck at invoice. I have no idea why you wouldn't want to make a deal like that other than you want to steal someone's cash. Snake!!

 

Not being happy about your situation is one thing, don't take it out on someone trying to provide a different perspective. You're off base here. Reel it in.

 

Wow, that really happened?

A salesman from another dealer several states away with absolutely nothing to gain tries to explain how dealerships work, and gets called a snake for his efforts?

Aside from the blatant disrespect for the guy who's paid nothing to share the insider perspective from the dealership's point of view, I think it's time to revisit the guidelines that we all agreed to when we joined. Specifically:

 

I agree there is no room for personal attacks. Frantz is simply offering a different perspective. If you don't like it don't take it but you should not call him names. He has nothing to benefit from your situation. If you feel dealer is low balling you then go somewhere else.

 

Wow what craziness in this thread!!! I too also appreciate all the info Franz is giving! It's just business, every industry is trying to make a profit. I'm not a fan of salesmen in general but I do appreciate the openness of someone from the industry.

 

Agreed. While a person is entitled to passionately defend his or her opinion, name calling is crossing the line from business to personal. Keep it civil and agree to dis-agree.

 

Back to businesses... Franz could you touch on how dealers/salesmen are getting paid on the back end from giving low loan rates? I'd like to better understand the backend mystery!

 

Nice to see you again Tom! It has been awhile my friend!

 

Ah yes the shop bill. A dealership is run like several businesses. So yeah, the dealer principle makes money on all three, I don't. The shop charges the used car department a discounted rate, but it's still enough to make your eyeballs pop out if you're used to small town shops etc. Sure I get they have overhead too, but just like the bottom line on a new car, it's expensive. Still, say you have a "perfect" car. You know, that top 3% Cobra claims his is. Even then there are expenses. We still provide a fresh state inspection and emissions inspection, regardless of how new the stickers are. Our shop is picky (hence they make more money on the sales department), and for liability purposes it's better to spend the $70 or whatever it is for new inspection than to sell it hoping the last shop was honest. On top of inspection we do an oil change and wiper replacement (rain-x) on every single car... so call that about $120 total true shop bill. On top of that every car gets washed at least twice, once for the front line and once for a customer. The full detail gets changed at $200 I believe and the second wash is at least $30. The detail shop can make a little money one the easy ones like we are talking, but the nasty ones it balances out on. Rather than charge every car a different rate, it's spread out. So I'm up to $350 on a perfect car. We all know if there is one thing wrong, that bill can get hundreds tacked on. So $1500 avg isn't really far off, it's just alot of money and it's not even counting the overhead like having a used car manager and an assistant to move cars around and take pictures and put in stickers. While not itemized per vehicle, such expenses get put into a "pack" on all used cars and that runs a few hundred bucks, but lets just say its $200. Now on a nice 2012 Raptor we would probably want to certify it from Ford. I honestly don't know that cost, but it's basically buying an upfront warranty at Ford's cost for better marketing. So if I were to get a Raptor at $34k as the ACV I would end up actually owning it for probably at least $2k more to get it to CPO, then I could market it at $46k, leaving a very nice $10k profit. But, just like new cars, do you really think someone is going to come in an offer $46k for a 4 year old Raptor with a quarter of it's life used up? I sure wouldn't! I can get a new one for around $50k, and lets be honest, it's a better truck. I still have to market it at $46k though, because customers respond well to discounts. If you give someone an honest good number they'll assume your being a "snake" or something and want more. Customers generally don't trust no haggle pricing because there isn't that feeling of getting a deal. It's stupid, but it's a fact and it's 100% customer driven. So after I hope a sucker does want it for $46k for a week or so the price drops. It keeps dropping until someone bites and we put together a deal. Lets say $42k. Great! Thats still $6k, which would be a huge deal. The bank works off ACV values though because the guy too cheap to buy a new Raptor doesn't have perfect credit in many cases. Frankly, it's often a young man with a hard working job who wants a cool truck to use at work, and for a respectable rate you typically need to be within 120% loan to value. $40,800 out the door. Well fine, the guy was flipped on his trade anyway and the payment didn't work, so we'll give him an extra $4k somewhere. Down to $38k, $2000 profit and an OTD around our number, call the bank and ask for a favor and it's a deal, maybe we'll make a buck on his trade to boot. $46k was really way to high anyhow, but we can dream!

I had a guy give me a horrible survey because I bought his trade for $2000 and the next day was selling it for $6000. We market vehicles immediately, but that doesn't mean we just put a sticker on it. His vehicle ended up needed an entire new dash cluster, though otherwise wasn't bad for an old Chevy Caviler just normal wear and stuff. When it finally did sell, it was for $4500, and a few bucks profit. Yes, sometimes we get lucky, and someone with $10k cash comes in to finance the rest of that Raptor. We put the high numbers out there hoping it works out that way. But asking for a huge profit rarely means we get it. The retail guys get stickers on their pay slips if the combined front and back end profits were over $3k, so it's far from a common event.

The more unique a vehicle is the harder it is to find a buyer for. ANY used car department would rather sell 10 cars for $1k profit than one car for $10k. We want to move them fast so we have fresh inventory and aren't paying interest on things. It's a business after all. Customers generally are just fine with us losing money on deals. Isn't that ripping us off for taking risks and providing vehicles to a community? Only if you think trying to make money off customers is ripping them off. Without getting off on breaking political rules of the forum, we are in plenty of trouble when we stop seeing profits as a good thing.

As for the back end. it's not super straight forward. Some banks give us a flat pay for securing them the loan, others give us a percentage point. It can vary widely by state laws as well. Generally we have the ability to beat your banks rate, even using your own bank. Our shop has about 10 banks we use on a regular basis. We give them plenty of profits and they give us good rates for reward. Thinking you can get a better rate on your own is like thinking you know more about car sales than a dealer because you've leased a new vehicle every three years. There are some banks that will rate match, but that's lazy to me and does't actually help you out. If a dealer knows they are getting your finance business they may help you out a few bucks. I encourage you to keep us honest on it though. Just like you should research online what your truck should cost, find out how much the loan should cost, and just ask us to meet/beat that. Keep in mind banks tend to advertise like car dealers and there is plenty of fine print in the low rates they show on their home page. It's not nearly as hard to sort through that though and then your own credit is the only real variable.

 

More good insight buddy! What always gets me is one dept billing another. I understand it's industry standard and a way to make sense of the paper trail on profit. It's all the same dealership dealership though. I run my own business. For once I'd like to bill myself for doing an estimate or the time it takes to write up a final invoice. It's like taking money out of the left pocket and putting it into the right. LOL. But seriously though, thanks for taking the time to explain everything so thoroughly from the other side of the equation!

 

No problem. I wish Cobra was right, but the truth is we're pretty hard working folks too and don't make nearly as much profits as people perceive. But it is very complex. I'm not "just a sales guy" but I'm also not the top dog by any means. So I get a pretty broad picture of the entire sales department processes with my role, though I can't speak as well for finance, service, body shop, etc. Lots of jobs at decent wages and working with nice folks.

 

Thanks, Frantz, for another stand up, eloquent response to a very blunt and ugly post. Most of us really appreciate your sense of sharing and education into the dealer's side of the business. There seems to be a new bunch on many fronts who "Stayed in a Holiday Inn Last Night."

 

Thanks again Frantz!

 

It shows in your posts. Not trying to rip someones head off for a four-pounder, just trying to earn the deal and make a profit for the boss while completing a deal the customer likes and can afford.

Reps, Frantz.

Exact same reaction I had. I'm kind of surprised the helpful, illuminating posts weren't taken as intended by Frantz.

Scale icon click, Tom.

Stewart

 

I saw someone on here getting a 84mo 2.49% loan for their new truck which seems crazy good compared to others I've seen. So if a person walks in and says that they can get a loan for some crazy bargain then the dealership can probably match it since they do so much business with the banks? At some point I would assume that they would say they can't match right?