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Car Wreck - Chapter 2: The Car Salesman’s Language, Why They Keep Using It, Even Though You Hate It


PHOTO (select to view enlarged photo)


PHOTO (select to view enlarged photo)

By Mark Ragsdale
Author / Speaker / Trainer / Consultant

The Auto Channel is thrilled to be able to present a serialized version of Mark Ragsdale's "Car Wreck" to our audience. Regardless of whether you are a consumer or an industry insider you will find this book of critical importance.
To go back and read Chapter 1 of this multi-part series CLICK HERE.


"Language is the source of misunderstandings."

                       Antoine de Saint-Exupery
                       Aviator & Writer (1900-1944)


The Hills arrived at the dealership in Jack's Mustang. Oh, how he loved that car! He'd graduated technical college, landed an apprenticeship, got an apartment, and finally bought his boyhood dream buggy. Two years new and too bad it had to go, he thought. Their first baby would be here in just six short months. They needed something else-a reliable mommy-mobile-one that didn't leave Jill feeling old.

And there it was, a dealer TV ad on a new Crossover; "No Money Down and Just $269 per month!" So she loaded Jack into the second love of his life and off they went to the dealership. Maybe they could get the payments even lower by trading in the Mustang, she thought.

Jack and Jill were expecting the $269 they saw on TV. Their salesperson, Eric, and the dealership he works for, are blessed by the opportunity of the Hills' visit today. However, they are also cursed with the challenge of revealing the truth to them. They must disclose the facts about the ad for which the couple probably won't qualify and the dreaded reality about Jack's Mustang. Nobody from the dealership had yet appraised the car or asked them what they still owed on it. But their ability to trade cars today already looked entirely grim in Eric's eyes.

The Hills had a plan: a clear agenda that customers prepare, prior to ever stepping foot in a car dealership: Get in. Get information. Get out! Then hightail it out of there as expediently as possible, careful to avoid any decision-making environment where pressure may loom. Car dealers, on the other hand, make a living out of putting customers into a decision-making position.

No Decision = No Income = No Dealership.

So dealerships have developed their own language to slow you down and sell you a car. This language delays the delivery of bad news until everything is written down and put out on the table. It is devised to keep you from getting angry or discouraged before you have selected a vehicle: designed so you won't storm out the showroom door into the arms of a competitor. It's high time you learn this language. And you will find the lesson here for free on The Auto Channel.

Prior to stepping foot onto the dealership lot, Jack had folded up the couple's unwritten game plan and tucked it inside the pocket of his Rambo suit; the figurative armor he had donned for their impending car shopping battle. Otherwise perfectly nice people morph into stealthy, well-heeled combatants when visiting a car dealership-a self-defense mechanism designed to retard purchase decisions.

Ironically, salespeople find themselves more intimidated by customers than the inverse, as is so commonly assumed and reported. Eric feared Rambo might be the only customer he'd see all day. His inner monologue chattered away: What did they owe on the Mustang? How would his sales manager value it? I wonder what their credit is like? Here comes Rambo.

Eric knew that customers like the Hills tend to recite the same limited number of questions and proclamations when they first meet a salesperson:

1. "What's your best price on that ______ over there?"

2. "What will you give me for my _______ trade-in?"

3. "What are your interest rates?"

4. "I'm going to three dealers today and the lowest price gets my business."

5. "I've been to XYZ and got a price on this ____. Can you beat it?"

6. "I've only got 10 minutes."

7. "I'm just gathering some information for my _______ today."

8. "I am just looking today!"

9. "I don't want or need any help. Can I have your business card?"

10. "I don't need the runaround. Can I see the manager to just get the best price?"

11. "How much do you require down?"

12. "Do you have any ______ in lime green with a zebra interior?"

13. "I saw one of these _____'s for thousands less!"

Despite countless hours of dealership training and role-playing with his management team and fellow salespeople on this material, Eric knew making a deal came down to isolating and addressing a customer's expectations-as unreasonable as they may be. Before either Jack or Jill even opened their mouths, their salesperson knew two pieces of information: the couple had an unrealistic payment budget in mind, and the Mustang, at a minimum, was going to be a major problem.

Eric grappled with the Hills' requests, refusing to do battle with Jack's Rambo alter ego. He needed them to drive the Crossover, get their Mustang appraised, and sit down at a desk, to conduct a write-up. The write-up is the time when the dealership could formally present its offer to a customer. The dealer had tracked the results of those visitors sitting down and receiving numbers, versus those who did not. Liars figure, but figures don't lie. Salespeople such as Eric were more than twice as effective in making a sale by reaching this point. Eric had learned it was essential to avoid conflict, at all costs. This strategy holds especially true with the likes of Rambo!

Eric confined himself to asking only powerful questions and steering clear of weak ones like the plague. These are the queries customers like Jack and Jill Hill hate and impede Eric's potential sale. Interrogatories such as "How much do you want to pay per month? How much money do you have down? How much do you expect for your trade?" These not only cause every salesperson in every dealership in America to sound like the same broken LP record, but they invite customers to lie.

Customers fear overpaying for vehicles in the most profound way. When they hear this language, they assume the worst: A greedy salesperson or dealer is attempting to max out every opportunity to make more money on them. So they lie. "I have no cash to put down. I can only afford two hundred dollars per month." Answers such as these provide salespeople with nothing more than useless, negative data. Even more harmful than the resulting damage to a salesperson's attitude, is the emotional place it brings the customer. The answers they give create emotional holes customers will not be able to climb out of later, thanks to their principle or pride. If a salesperson asks the wrong question and the customer sticks to his guns-you have a dead deal.

Basic sixth-grade math castrates these questions further. Eric knows the bank balance the couple still owes on their Mustang may cost $200 per month by itself. If he could just add that $200 to the $269 advertised payment, they saw on TV, he might have a deal. Quote them a $469 payment in the first five minutes of conversation however, and Eric would see the Hills storm out of the dealership as quickly as they came in.

You see, Eric understood and appreciated the Hills' strategy and agenda. He wanted to accommodate the "gather information quickly" part on which he and the Hills agreed. However, Eric needed to gather information from Jack and Jill, delaying delivery of the information they came seeking. Why? Simply put, most customers lack the financial ability to select, purchase, and take delivery of their primary choice of vehicle. There are just too many personal, technical impediments in order to make all the pieces of the deal fit together.

The pieces include the customer's personal credit, his income situation, and the fact he just plain owes too much money on his trade-in. Most car deals require working with a combination of all three, in order to gain loan approval from a lender. These factors juggle the amount banks will advance or loan on a particular new car, how much is still owed on the old one being traded, and any other income or credit baggage each customer is carrying. Seventy-five percent of the time dealers must arrange financing around these issues in order to deliver a car.

No Solutions = No Financing = No Deliveries = No Dealership.

None of this has anything to do with satisfying either the customer's primary choice of vehicle or the monthly payments he expects from advertising. Blindly showing the customer his primary choice of vehicle can be-and usually is-a big mistake. If personal obstacles crop up too late in the negotiations, they can prevent the customer from buying his first choice. Even worse, this usually embarrasses him or her out of purchasing anything from the dealership altogether. Lottery winners and the farmer with stacks of moldy mattress money stuffed into his overalls sometimes shows up in dealership folklore. In reality however, dapper-dressed dandies face the same financial challenges as folks in torn jeans or Adidas track suits.

Dealers and their salespeople face these obstacles every day in order to break the bad news to you in a manner that will still deliver a vehicle. If they don't do the job properly, they will take the blame through customer assertions of dealer greed. And while the questions you are asked on the lot and in the showroom are distasteful and often offensive, they are employed for these reasons. Some dealerships do a better job than others in meeting the same end-seating loans, delivering cars, and generating income.

Five Things You Need to Know BEFORE you shop:

1. The average transaction price on the new vehicle you are shopping. This is available at KBB.com through their New Car Blue Book database.

2. The current market value of your trade-in: The most up-to-date data is available on either Cars.com or Autotrader.com. You will have to back-off close to $2,000 from these numbers in order to arrive at a true wholesale value for your car. This allows for roughly $700 in average dealer set-up of your vehicle before he puts it out on his lot for resale, along with room for his resale profit on the next buyer. Note* these sites are also a great place to reference when figuring out what to pay for a used vehicle as well.

3. The current outstanding balance still due on your trade-in: This can be gathered by simply calling your lender. The numbers change almost daily, so be sure to ask how long the payoff number is good.

4. Your positive or negative equity position: Take the market value number you derived in Step 2 and deduct the payoff number in Step 3.

5. Calculate the monthly payments at the various terms you are contemplating by using the payment tool at TheAutoChannel.com. Play with the numbers by adding in and removing your trade-in altogether from the equation. You will see in most cases, your trade doesn't help you get a lower payment. Rather, most consumers are upside-down in their current loan, causing them to increase their payment, lengthen their finance term, or put some cash down.

As you can see, you have three numbers to consider when it comes to price: the price of their car, the price of your car, and the difference between the two. What's more, is the impact of your often upside-down car loan and credit condition in structuring your next loan. Since trade valuations and negative equity drive most of the friction in the car-buying process, I will explain the conditions creating upside-down loans in the next of our Auto Channel series. Hint: Dealer Profit is not the cause. Ninety percent of your money is wasted elsewhere in the transaction.

CLICK HERE for Chapter 3

Mark Ragsdale

www.MarkRagsdale.com
Email: Mark@MarkRagsdale.com
Business Phone: 508.299.7080
Fax: 866.299.6010


Author's Social Media Contacts:
Facebook Author Page: www.facebook.com/CarWreckBook
Twitter Author Page: www.twitter.com/MarkRagsdale
LinkedIn Profile: www.linkedin.com/in/MarkRagsdale


Car Wreck's Social Media Contacts:
Facebook Fan Page: www.facebook.com/CarWreckFans
Twitter Book Page: www.twitter.com/CarWreckBook

Mark Ragsdale is author of the book Car Wreck: How You Got Rear-Ended, Run Over, & Crushed by the U.S. Auto Industry (Langdon Street Press, ISBN-13: 978-1934938652, Paperback 256 pp., $15.95). It is sold by booksellers nationwide and online. Mark has been interviewed by Fox Business Channel’s Neil Cavuto, Wall Street Journal Radio, and various syndicated news columnists. For more information about the book or author visit www.MarkRagsdale.com.

SEE ALSO: The Auto Channel's 4 Steps to become a smarter car buyer