Tough times for auto dealers

July 16 2009 by Ellen Roseman

I often think about replacing my 12-year-old car. But then I remember it works well (mostly) and has low mileage. So why not keep driving until it drops?

My column this week was for those sitting on the sidelines, wondering whether to buy or not to buy. Will the hot deals disappear? Seems like some already have.

When I talked about using dealer cost information to negotiate for a good price, I heard from several industry insiders. They felt I didn’t have the whole story.

The commissions are much lower than customers believe them to be, I was told. And selling a car is a tough, time-consuming, not all that rewarding job.

If you’re planning to buy a car, here’s what the other side is thinking.

15 comments

  1. Soccer moms unite

    Jul 17 2009

    Ellen, thanks for article. It’s people like you in media, print and tv specials who have exposed the car industry for what they are and helped us make informed choices. The car sales industry hate that and would prefer to keep us in the dark about everything to keep ripping us off!!!

    I wonder if there’s a link between consumer backlash, i.e. proliferation of car hate sites of mostly American cars and dealers, to the core changes in auto purchases over the last 30 years. Could that be the root cause of the bankruptcies they’re going through – hmmm?

    If car dealerships and sales people were so honest, why then is there a need for OMVIC? The truth is those shenanigans are still going on and consumers are still getting ripped off!!!

    As for myself, I give the finger to the dealerships in my own special way. I look at private sales on kijiji and craigslist and have saved a bundle — and not one of my purchases has ever broken down on me!!!

  2. Joho

    Jul 17 2009

    I’ve never had a positive car-buying experience.

    When buying my first vehicle, I made a tentative deal with the salesperson, who phoned the next morning to say that he “forgot” to add in the price of the vinyl roof. I would have to pay the additional cost! Trustworthy? Customer oriented?

    Next vehicle. Bought it. Returned to the salesperson within the warranty period to report a spot on the hood. Salesperson replied that it was only a stone chip. I returned in another few months to again discuss the worsening spot. He replied, “That’s a rust spot. You left it too late. The warranty is expired (and by that time, it had.) If you’d come to us earlier, we could have taken action.” Trustworthy? Customer oriented?

    Next vehicle, I’d agreed, during the deal-making, to the auto company’s discount, only to have it rescinded because I, according to the company, had not complied with their ‘policy’ to take delivery before the offer expiry date, when it was the dealership that refused to relinquish the vehicle to me until it has been serviced.

    I was then left to bounce, for four months, between the dealership, the auto company and the finance arm seeking resolution, each month receiving nastier letters accusing me of refusal to pay. Trustworthy? Customer oriented?? I finally got resolution by phoning the company president’s office.

    And then there’s the dealership that installed a block heater backwards in my new vehicle. When I reported it, I was laughed at, told that was impossible, that it just couldn’t happen. I insisted that the service people investigate. Lo and behold, block heater installed incorrectly.

    All these dealerships except the first are STILL IN BUSINESS.

    The auto sales/service culture needs to change. Perhaps the honest, diligent sales people who responded to your column will lead the way.

  3. Soccer mom

    Jul 22 2009

    It’s pathetic when the most-vulnerable-to-slimey-salesmen are on an ‘almost’ even playing field that we have car jockeys like “Luxury” crying poor.

    A little googling and I find that first year car salesmen can earn up to and over 50K a year and for more experienced sales people, it’s between 100K to 200K. And this is during these “rough” times. Not bad for manipulating Moms into buying extras that are sold as “safety features” for her family.

    “Luxury” conveniently muddies up the facts and compares apples to oranges. In the last post, he points out how thin the margins are for new cars – but only when he’s up against a buyer who’s done her research and stuck to her guns. What about the rest of the public? And what about used cars? We all know there’s a healthy amount of fat in there!

    I have no sympathy for him or his profession and will be happy to stick to private sales. No more wasting my time and no more bullshit from greasy salesmen.

    And BTW here’s what happens when you sucker, or in your words “hit-a-home-run,” we find out and tell other moms. And you’re still wondering why it is your profession has that kind of rep?

  4. New car buyer

    Jul 28 2009

    I can’t believe what some of these salespeople are saying.

    Quoting one, “Now I am an above average salesperson who sells on average 15 vehicles per month. So if I am an above average salesperson, and customers did exactly what you suggested, for all my hard efforts last month I would have earned $1,125 before taxes and deductions. Does that seem right to you? Can you live off of $1,125?”

    Well, guess what? 15 vehicles a month? I think I would rather buy from someone other than this sales person, because I can get a better deal (that is, very close to invoice price from another dealer/sales person). So you can change your figure to 14 vehicles only this month.

    It’s not the buyer’s fault that you only get paid that much on commission. The fact is that the car costs x dollars and customer wants to buy it for closer to x than pay the full MSRP.

    The customer is already shelling out huge $$$ to pay for the car. Why should the customer pay for your commission? With the internet and ease of information gathering nowadays, most of the work and research is done by the buyer.

    Also, even if the buyer gets the car for invoice price, the dealer is still making money from “hold backs”, rebates and incentives offered by the factory.

  5. New car buyer

    Jul 28 2009

    In Canada, there are websites where you can find out exactly how much the wholesale price of the car really is. APA or Car Cost Canada come to mind.

    Once you get the reports, you can typically get the car for the wholesale/invoice price, if you are a good negotiator, or up to $500 above wholesale price.

    Also, the reports will have information on any cash purchase discount and other factory incentives like 0% financing that might be available.

    Remember that you can get the new vehicle for the wholesale price and the dealer would still be making money. Do not believe their lies that they won’t make anything.

  6. Joe

    Mar 23 2011

    What a lot of hogwash. Another so called expose on the car business by a “save the whales” uninformed spectator, who obviously has little knowledge about the car sales industry in Ontario.

    I went to my doctor yesterday. He collected full list price for his services, no questions asked.

    What makes his right to earn a decent wage any more elevated than a sales professional in the auto business? Please give me a break!

    Regards,
    JP

  7. Bean town

    Apr 18 2012

    Oh please – you have nothing in common with doctors. They SAVE lives, while you rip off innocent patrons.

    Imagine doctors were as shameless as you rip-off artists? “Well we can offer you a new hip, but I’ll have to charge you an extra 10K in my pocket”.

    You car salespeople are sickening. Acting like it’s so hard for you to make a living. With your fake tie, fake smile, sell-it-even-if-it’s-dangerous demeanor.

    I will continue to use consumer groups like the APA and CCC and spread the word to get fair prices for autos. They have served me and my partner well, as we have saved a tremendous amount (finding out holdback cost, invoice cost, incentives). What a dirty enterprise.

    Buyers beware! Buyers be informed!

  8. J Havin

    Jul 15 2013

    I have been with Ford for over 20 years. Times have changed dramatically for this industry.

    In the 1970s and 1980s, there was misuse of inflated pricing and underhanded practices. Only some dealers had done this to engage in record profits.

    Today, there is a complete reversal to what happened decades ago. Now there are consumer and provincial programs that protect the customer from an unfair deal.

    Likewise, they protect the dealership and the salesperson from a customer trying to take advantage of them. In Alberta, it is called Amvic and the salesperson pays a yearly fee to protect your interest and ours.

    The market has become so competitive there is no longer the same profit margin of years ago. Prices have leveled somewhat, but the cost has increased to the point of leaving little margin.

    I am not sure about the imports, but in most North American vehicles, you sell an entry car or sport utility and you will probably make less than $200 for your efforts. And it can take several visits at hours at a time to close a deal.

    Higher line trucks and diesels are where you can make some profit as a salesperson. Used cars are another, depending on the dealership you work for.

    That being said, I have made $200 for selling an $87,000 truck. The deal took a week to complete and I spent hours transporting it to get the accessories installed.

    And then in 20 minutes, I sold a $6,000 car and made a commission of $450.

    More expensive does not mean more income. The average income a salesperson will make varies from a low of $40,000 a year to a high of $100,000, with most being within $40-50,000.

    This is not a get rich job. I know some of the best in the business and their income might get as high as $125,000, but that is rare.

    As for the above comments, everyone has different skill sets. I’ve seen doctors and salespeople both abuse the system.

    To the person above, what you said shows me you have a very poor judgment and really should evaluate your morals and position in life.

    As far as I’m concerned, all people are equal until they show otherwise, as you just did. Also, if you expect to purchase at dead cost with a salesperson that works on commission, then you should pay the salesperson for the time he has invested to make your purchase experience a good one.

    No one should work for free. If that is your thinking, please work for free and do not charge your patients a fee for coming in for you to do your job.

    Automotive sales is virtually the highest stress job you can have. Combined with long hours and lack of regular meals, it’s not easy. Most people cannot do this line of work.

    Yes, it can be rewarding. I have a 97% completely satisfied rating and that is because people feel they have been treated fairly.

    The best thing I can recommend is to find a dealer and salesperson you are comfortable with, treat him or her fairly and they will do the same for you.

    Coming in demanding you get the vehicle for free is not a way to make things go smoothly. And by the way, I have shown people the merits of purchasing a vehicle with very advanced safety systems.

    One client came in after an accident and gave me tickets to the theatre, thanking me so much for putting her into a vehicle with canopy side airbags. According to her, it saved her life when a Dodge 3500 hit her Mkx at 90 kms an hour on her driver’s door.

    Please don’t judge people by what they do. I’ve seen good and bad in virtually every profession.

    If you want to have a good idea of what it’s like, there is a video on YouTube called The Universe Needs Car Salesmen.