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March 09, 1999

Confessions of a Car Salesman

The Sales Manager

The person with the power at the car dealership is the sales manager. He sits in a raised desk commonly known as "the tower." The sales manager is the person you are ultimately negotiating with when you buy a car.

Why won't the sales manager deal with you directly? Because, if he negotiates with you through the sales staff, he can run up to ten or twelve negotiations at the same time. Everyone gets a different deal even though everyone is negotiating with the sales manager.

Why?

A number of reasons.

First, understand that the sales manager NEEDS to sell cars. The sales staff will never admit this. Not only is the sales manager under pressure because his own compensation is directly tied to the number of cars he moves per month, he is also under acute pressure from the dealer (his boss) and the sales staff (his subordinates).

When a new car comes onto the sales lot, the dealer does not own it. He has borrowed the money necessary to purchase that car from the manufacturer. The dealer's lender is called a "floor plan financer." Every new car on the lot is basically mortgaged, and the dealer pays interest on each new car from the day it rolls off the truck. Accordingly, dealers pressure their sales managers to achieve constant turnover. If more cars are coming off the truck, more cars must be sold; otherwise the interest payments become painful. The sales manager must move cars off the lot.

A salesman will often pressure his manager into accepting a lower price on a car, just so the salesman can get a sale. Salesmen need to eat. This is anecdotal, but I can't tell you how many times I saw a salesman pleading with the sales manager to give in and sell a car for a very small profit. A $50 commission may seem like small potatoes, but it buys a bag of groceries. If the salesman is new, sometimes the sales manager will "throw him a bone," or agree to a no-profit sale, just to give him a shot of confidence.

Myth or Fact -- You can often get a better deal on a car at the end of the month. It's a fact, Fool. If sales are lagging, the sales manager will hold a meeting right before the last weekend of the month. The sales manager shows everyone how many cars need to be sold over the weekend, promises bonuses, and tells the sales staff that he will make concessions on price that he normally would not make.

As I said in Tip # 1, the salesman can be turned into your pawn. And who is your adversary? The sales manager. He appears formidable, and he is. But can he succumb to pressure and capitulate just like you? You bet he can.

--Mike Cavendish


Tip # 3 -- Why the Real Blue Book is Your Biggest Ally

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