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129 Cars

thisamericanlife.org

162 pointscpymchn62 comments

I listened to this podcast the other day and it was one of the more compelling This American Life episodes I've listened to recently. I say that as a pretty big fan of TAL.

They spend the episode interviewing car salespeople and managers at one particular dealership over the course of a week (IIRC), where the salespeople are trying to rack up a certain number of sales to qualify for a bonus payout that means the difference between being in the red vs being in the black. They clear up some myths about car sales and generally get to the heart of what it's like to be a salesperson.

The things that were interesting to me were the various mindsets and tactics the salespeople use to sell a car, especially when they're desperate. The way the salespeople negotiate between two different parties – on one side with the customer, on the other side with their manager – was also something I hadn't thought about.

That's about the gist of it: a week in sales during a somewhat desperate situation from a car dealership's perspective. As a semi-regular podcast listener who really likes TAL but feels like they have some hits and some misses, this one is definitely a hit.

> course of a week

I think it was a month (129 was their monthly quota). But the amazing stuff comes from the last couple of days. Damn, that was tense...

"The way the salespeople negotiate between two different parties – on one side with the customer, on the other side with their manager"

This is what really struck at me. I was really surprise at how isolated a car sales guy is, even within the same dealership. It truly is every guy for themselves.

Is this situation ripe for a disruption?

Yes, but it's protected by law. Look at how difficult it is for Tesla to sell via a more direct method, without using dealerships.

Honda already has by not over producing vehicles. IIRC Honda nets about $1K more per car than any domestic.

There's also no-haggle dealerships for people who like to get the same deal as everyone else.

No-haggle dealerships are a rip off if you're a good negotiator though.

Planet Money did an excellent piece on just this - Cars Direct attempted something similar (and failed) in the late 90's.

http://www.npr.org/blogs/money/2013/02/19/172402376/why-buyi...

It is very ripe for disruption and has been for decades. The entire model (as other commenters have stated) is protected by law at the behest of a special interest lobby.

I sold new cars for a while. The dealer really should just be a showroom staffed by manufacturer sales people with perhaps some bonus structure. Instead it's filled with middlemen whose children will only eat if they can convince you to pay more for the car than a more efficient market would allow for.

If you watch the movie "Suckers" you'll understand the "asshole" culture of car sales. Unfortunately it's really that way because you have to be an asshole (a taker) to survive.

Even without legal protection, it's likely that buying a car would remain a confrontational experience.

We negotiate over cars because the price is sufficiently high that it's worth it to pay an employee who's sole job is to wiggle that extra 5% out of you.

Other examples of items we negotiate the purchase of include pianos, heavy industrial equipment, home repair and maintenance, and myriad commercial products and services. Hardly any of these are "protected" in a similar fashion to car dealers.

Further evidence in support of this theory is the trend in poorer countries to increase the number of items with negotiated prices: As the wages of decent negotiators fall, it makes more sense for a business to hire them and thus improve margins.

> I listened to this podcast the other day and it was one of the more compelling This American Life episodes I've listened to recently.

Agree. Rarely have I felt so riveted to what was going on. I attribute it to the pace and the chronology. Unlike many TAL shows which are told in retrospect and/or are multi-parters, this one is a single storyline with the actors right there, on air, dealing with the conflict and resolution before our ears.

A quite enjoyable and interesting piece by TAL. One aspect that I found interesting is that Manny, the guy inspired by Sun Tzu and without much inherent interest in the cars themselves, actually fared poorly in sales [1].

This sort of salesman is exactly the sort of person I always want to avoid when I am looking at purchasing something, so I am glad to see his techniques were not all that effective.

Overall, the piece doesn't paint the dealership model in a very positive light. While it makes one sympathetic to some of the individual salesmen (at least, to some extent), it also largely reinforces many peoples' assumptions that, mostly, they are prey when they arrive at a dealership, unless they know what they are doing (or, if they happen to arrive at the end of the month during a poor sales month and happen to be slightly stubborn).

A related note: I'd love to see more car sales go the way of Tesla and Saturn [2] (yes, Saturn), where pricing is much more transparent/fixed. Basically, I find the current dealership model's incentives to be largely mismatched to the actual needs of consumers.

[1] (~10 cars per month) http://www.thisamericanlife.org/at-the-car-lot/

[2] http://knowledge.wharton.upenn.edu/article/saturn-a-wealth-o...

> Basically, I find the current dealership model's incentives to be largely mismatched to the actual needs of consumers.

Agreed... the current negotiation model seems guaranteed to ensure that the customer walks away feeling screwed. If you buy, there's always that lingering worry that there was money left on the table.

Just because the car dealership isn't making money doesn't mean you are not being screwed anyway.

Relevant: http://www.edmunds.com/car-buying/confessions-of-a-car-sales...

Best I've ever read on the auto dealership industry.

Yes, this Edmund's article is a classic! Required reading for anyone about to buy a car.

That was so intense... I was stressed from the very beginning.

There's a lot to be said for a stable paycheck.

Personally, I only buy used cars and pay cash. But if I didn't, I know that I'd be buying my car at the end of the month...

If you listen to this, don't forget to to look at the photo gallery. I waited till after I'd finished listening to look at it, I think that worked out well.

This episode was definitely very well done. Made me think about how Tesla is subverting the traditional dealership model by opening up their own salesrooms, despite strong opposition from these dealers. I wonder who will prevail in a world where price comparisons are instantly done over the internet. The podcast even highlights the fact that profit margins have been squeezed because of this.

My Dad has sold cars for as long as I've known him. He was a top salesmaster for GM for several years in Canada.

The interesting thing I found each this podcast is how consistent it was with the stories he'd tell us over dinner. We always thought he was just having a tough time with poor management, but it seems that he's not alone. Since moving to fleet many years ago, the dealer would often sell cars at a loss so they could not only hit numbers to be ranked #1, but also for the incentives from the manufacturer.

One thing the show left out is the unbelievable amount of paperwork involved in quoting someone an accurate price. Also, the amazing shuffling of cars that goes on between dealers. With certain models only being built for a short period of time, the custom orders take hours and hours of hunting and pecking. On the consumer side it feels like I ask for a bunch of stuff for my car and a week later it shows up as expected.

As others have noted, this is an industry primed for a major disruption. The tools most car salesman use on a daily basis haven't really progressed since they left typewriters.

The other major struggle for the industry is that a lot of salesmen have been salesmen their whole lives and don't want to retire. Thus, there's an office full of 70 to 80 year old hanging around while the other half runs ragged to make a few hundred bucks.

Could you give an idea what kind of money top salesmen got and what was the commission and bonus structure like

He wouldn't give up numbers, but the numbers aren't great considering the amount of work to be done.

I think a top guy these days would clear 150 in an unbelievable year and closer to 70 on an OK year. This said, a lot of guys make 40 and struggle.

This industry would benefit from a huge bear hug from the tech industry - - - as I said before, the amount of effort to get quotes is a lot, and as a result a lot of sales guys end up pushing paper for their 80%.

Car salesmen can be interesting people if you get them to drop their guard a bit and chat. A surprising number of them are simply transiting through car sales to make ends meet between their main career. In a rough economy, car sales is almost always a way to get a short-term job.

Of course the negotiation part is annoying and time-wasting. I suppose for every person that gets a good deal, 10 get a bad one and that's why it lasts. It's also one of the reasons why CarMax and Costco Auto are extremely popular even if the price you pay isn't necessarily the best possible you can negotiate. Buying a new car can literally take an entire day, and not dealing with the negotiation bullshit can save hours off of the purchase experience.

Also, negotiations don't end with the salesman, you can negotiate quite a bit during financing. You can usually get a lower rate if you buy all sorts of warranties and other cancelable agreements. Then go home and cancel those agreements immediately (it's not easy, they make it very hard to figure out how to do it). Over the lifetime of the car loan it can save you thousands of dollars in interest payments.

I grew up around (mostly large, high volume) car dealerships. Dad was a mechanic and was friends with the sales folks. Car sales people come in two flavors, the career guys. These are the guys that know cars and what gets people to buy them. They make good money(knew one guy that was over 300k/yr, he was an extremely rare dude.). This is the vast majority of the guys you'll see in large dealerships now days. The sales person competition has simply weeded out the less than stellar sales people, dealers can't afford to have them around the sales floor.

The second is the transients you're talking about that just move through dealerships because they think it's quick money. Now days these guys are mostly at the buy-here-pay-here places and lower end dealers.

As for negotiation....it's just not like it used to be. Used to be the sales guy could get you a ton off and various other perks like warranties and detail jobs and shit. Now days the sales guy can do some of that, but in the end the big saving for consumers is in the financing office. If you're willing to spend the time you can save big big money by working with/against the financing agent. Note; paying cash is almost always a bad idea when buying a car. The rebates banks offer are HUGE and you're not going to get them by paying cash.

> Now days the sales guy can do some of that, but in the end the big saving for consumers is in the financing office.

Yeah, it's astonishing how much the car will cost you after you pay everything off through the loan vs. the agreed upon price. A 10% interest rate on a 5 year $30,000 car loan costs $8,244.68.

It's not uncommon for people with so-so/bad credit to get rates in the 20+%. A 22% loan on $30k over 5 years costs almost another $20k! That's like buying an entire extra car!

This is me at a used car dealership Wednesday, the 1st.

HIM: $13,999

ME: $9,500

HIM: Oh no no no no.(click click click - on his computer). Ok ok, this is what I can do for you $13,499. I take blah blah

.... 5 minutes later ...

HIM: Ok $10,000 and that is my final.

ME: $9,500.

In the end I didn't buy it. It's just amazing how we shaved $4000 off in less than 5 minutes. This industry needs to be regulated.

That doesn't sound like a negotiation.... if you had started at $9,000 and come up $500 at the end you might have gotten it.

But why? It's the same number in the end. Is my willingness to play this type of game worth $500 to the sales person?

I completely agree with your type of thinking. I've always thought the negotiation game ($9500 + $0 != $9000 + $500), while sensible from a psychological perspective, is downright silly. I'd probably act the same as rokhayakebe. Sure, it isn't a negotiation, but perhaps I don't need to negotiate. If I've got a price and I'm settled on it, we may as well get down to business. After all, my time is worth something as well, and six-hour battles at car dealerships sound like a waste of it to me.

It shows good faith. It shows your willingness to negotiate.

You can go through life upset that the world doesn't work the way it "should" - you can even refuse to participate like the original poster. But you will generally have a worse outcome, so is it worth it? Why not play along, just a little?

Same thing goes for: dressing up (why should it matter if I'm in a suit?), sending thank yous (why should it matter if I already said thank you?), and just about any other social grace.

I don't think this matters as much when dealing with a professional negotiator. He has less feeling involved.

With a private party, I agree with you.

I am the WORST negotiator one earth. I learned that a long time ago, hence I go in with what I have in mind and I do not budge.

I'll tell you something. Next time I am negotiating I will start HIGH and go LOW. It won't work, but I would love to see the face of the sales guy.

You confuse negotiation with compromise. They're not the same thing.

> This industry needs to be regulated.

Ask Tesla how that's going for them.

Interestingly, I have a friend who works at a used car dealership. She did a report and their average profit is $4500 per car.

Maybe you took all his play out of it, and he really needed the $500 to make the deal.

"NOTE: the Internet version of this episode includes un-bleeped curse words."

Are there really people who care?

Certainly. One simple example would be a teacher who wanted to share an excerpt with her classroom. Listening to the standard bleeped version on the radio and then accidentally sharing a version with profanity to the students could cause a lot of trouble.

Probably not many, but it's worth noting as many people listen to TAL with younger children (e.g. in the car).

1. Why did they start buying cars themselves well before the deadline on the last day?

2. Why didn't they push delivery of the 130th vehicle to the 1st of next month?

I bought a car recently and I can tell you if I've gone through all that paperwork and haggling, I want my car that night. There's no way I'm waiting until the next day to get my car just so some dealership can get a head start on its quota.

I don't understand why the general manager didn't wait till the last minute to book the dealership's two loaner car purchases.

When you go to your sales team and the new goal is 7 rather than 9, morale gets a boost and you try a bit harder to sell those cars. The goal is closer and within reach.

I can't listen to audio. Why is it interesting?

"One of the best podcast episodes you'll ever hear about selling software. Actually about cars. Stick with it."

https://twitter.com/patio11/status/418879954894340096

To substantiate that, if the only thing you got from the interview was the mindset for dealing with customers who are not ready to purchase ("Let's go over this: they are in a car dealership..."), it is worth it.

Next time I have a call with a purchasing officer for the County of Springfield (not actually my last call) I'm going to say "Remember, Patrick, nobody ever sent an email to the CEO of an appointment reminder company just because they were feeling lonely and wanted someone to talk to."

> if the only thing you got...

Damn, here I was getting ready to put balloons all over my web site.

> "Let's go over this: they are in a car dealership..."

Yet another reason why physically going to a dealership seriously weakens your negotiation position as a buyer. Mail, phone or fax multiple dealerships and do not enter one before getting a good offer.

Possibly things have changed, but I remember PG posted his correspondence with a car salesman via email trying to buy a Jetta or something. Basically got stonewalled.

Something I read in a book about buying cars once: If you go to the dealer, test drive the car, etc. (basically take up some of the salesman's time) you can negotiate a better deal than if you just walked in or called and said "This is my price, take it or leave it."

The reason this works is because the salesman has a "sunk cost" in dealing with you for the last half hour and is reluctant to let that time be wasted by refusing a sale.

A competent salesperson (a category which probably excludes many car salespeople...) doesn't fall for the sunk cost fallacy, but they - and their manager - might still be more inclined to offer the deepest possible discount if you've spent the last half-hour actually showing a genuine interest in buying a car, not least because by that stage there's little more they can do to influence your perception of the value of the car.

It's a very good piece of radio, and it's a compelling account of how selling works in the real world but I disagree with the tweet that it's the best podcast you'll ever hear about selling software.

Selling your own software is mostly a distance selling arrangement with little or no agents. So, for example, you can't easily let the customer think they've negotiated a great deal and then get your manager to turn the deal down and counter-offer yourself. You'd look pretty stupid. Also, you probably won't set yourself ridiculous targets which are driven by the desire to smooth out the supply side and grow the business. Software doesn't work that way.

Selling software face-to-face might be a lot similar. But that might be the same as just plain old selling.

It humanizes car dealers and translates their specific life lessons into generalized experiences the listener can internalize.

It discusses the life of a a Chrysler/Dodge/Jeep new and used sales shop through shadowed interviews of almost the entire staff. It discusses the lives and approach to work of the sales managers and many of the sales people, as well as the struggles and realities of how much a dealership actually makes, the pressures from the manufacturers, and how hard they work to both provide a fair price to customers and a life for their families.

Transcript: http://www.thisamericanlife.org/radio-archives/episode/513/t...

Does anyone have any other good american life episodes ? I love shows where they intersect business, operations and people issues.

This sounds awesome, but I cannot for the life of me understand why the Podcast feed for This American Life only contains one goddamn entry. Who uses this shit? What is the point of a podcast if I can't download it in my podcast software of choice on my home Wi-Fi network and listen to it at my leisure?

Am I missing something with a typical podcast workflow? Because this makes zero sense.

They used to be downloadable, now you can pay to listen at your leisure... or pirate it..

I would love to pay them for their content, but they only have an iTunes option. iTunes? Seriously? What is this, 2002?

Podcast Adict (Android) finds it just fine.

Is iTunes not cool anymore? How are cool people distributing audio?

You can also download the app for a one time fee of $2.99.

Buy their app and you can stream any episode whenever you want.

My podcast client fetches new episodes as they become available in the feed and then stores them for me to play whenever I like.

Your response is overly harsh. Consider there are political and financial challenges they might be dealing with as a non-profit that don't allow them to be as accommodating as you demand.

a salesman is walking with a customer in a dark lot trying to find a particular model? don't they have updated inventory?

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