Car Buying Learning Center
In 2000, I spent three months undercover as a car salesman and wrote about my experiences in "Confessions of a Car Salesman." In the ensuing years, thousands of car buyers have read the article and thanked Edmunds for publishing it. Countless car salespeople and dealers also have read it. While the story has resonated with some industry insiders, others have challenged the integrity of the story by saying, "That doesn't happen anymore. Things have changed."
Brave New World or Same Old Thing?
Have things changed? It's hard to address that question because of the enormous variety of dealerships and salespeople in the business today. I believe that depending on where and how you shop, you could have the same contentious experience your father had 50 years ago. Or, if you shop differently, using the tools of the Internet, you could have a vastly different experience: one that is efficient, fair and stress-free.
So if you pressed me for a quick answer as to whether the shady practices described in "Confessions" still happen, I would have to say yes: In some dealerships, those tricks and traps are alive and well. But in many other dealerships they are dead and buried.
Some statistics seem to bear that out: In 2012, consumers made 59,214 complaints alleging fraudulent practices in the sale of new and used cars, according to the Federal Trade Commission. That's a substantial number, but it constitutes just a fraction of the nearly 15 million cars sold in the U.S. in 2012. My sense is that, on the whole, the car shopping experience has improved for the customer.
What Car Shoppers Hate
To provide a more specific answer about what has and hasn't changed, I made a list of the things that irk car shoppers. It boils down to these five "pain points."
1. I can't get a real price for the car I'm interested in buying.
2. I hate negotiating.
3. I don't like waiting while my salesman takes my offer to "the boss."
4. I hate feeling pressured and manipulated.
5. The sales pitches for additional products and services in the finance and insurance office make me uncomfortable.
Some of these pain points aren't as acute as they once were, but often that's only true if the shopper has discovered a workaround. In other words, many dealers would love to have you simply walk onto the car lot, as shoppers have always done, and play the age-old car-buying game. But savvy shoppers have learned to use the Web and dealership Internet departments, both of which provide information and a means of communication that speeds up the shopping process enormously. Oftentimes, dealerships don't advertise these approaches, so it is up to the shopper to discover them and learn how to use them.
In assessing whether each pain point has become less painful in the last decade, I base my answers on my experiences as someone who buys an average of 10 cars each year for the Edmunds.com long-term testing fleet. I also talk to many people who are actively shopping for cars and they share their experiences with me. Finally, I've consulted with experienced car salesmen and dealers for their insights.
Pain Point No. 1: I can't get a real price for the car I'm interested in buying.
This remains a huge problem and ranks as the No. 1 complaint from 54 percent of car shoppers, according to Edmunds.com research. On some car lots, it is impossible to quickly get a price on a car for sale. If you ask a salesperson at those stores, "What is the real price of this car?" the answer might be, "What are you willing to pay?" Or, "It depends. Are you financing with us?" Or many other possible non-answers.
To deal with this issue, Edmunds.com has introduced Price PromiseSM to give shoppers an upfront, guaranteed price on a specific car at a dealership. Meanwhile, some dealerships have experimented with posting discounted prices on the cars. This is helpful, but still leaves the shopper wondering if this is the very lowest the dealer is willing to accept. Still other dealership chains, such as AutoNationDirect.com provide firm, discounted prices online.
So on this pain point at least, there has been progress — as long as you know the workaround.
Pain Point No. 2: I hate negotiating.
Most buyers don't know how to negotiate and as a result they feel vulnerable and even frightened by the process. But they are torn: They want a good deal and don't want to feel the car salesperson is taking advantage of them. So they think they must get into haggle mode.
Car buyers who walk onto a car lot and negotiate face-to-face in a sales office may find that the negotiation process is largely unchanged. But shoppers choosing the Internet route can generally avoid negotiating. Since the initial price quote from the Internet sales team is typically so close to invoice and so far below the sticker price, shoppers often feel there is little to gain by haggling.
Again, the improvement in this area lies in knowing about and using an alternative to conventional car buying.
Pain Point No. 3: I don't like waiting while my salesman takes my offer to "the boss."
Some dealers still believe that the longer they keep customers waiting, the greater the time investment the shoppers will feel they've made and the more likely they will be to buy at a higher price. It's understandable that a sales manager needs to approve a price before he finalizes the deal. But there is no reason for it to take so long.
Unfortunately, this delaying tactic is still in effect at some dealerships. It ranges widely from a brief and tolerable five-minute absence to 30 minutes in limbo. In some cases, the salesperson who returns to the buyer is someone altogether new, or is one of many levels of managers who will now employ a different tactic to achieve a sale. A shopper who gets caught up in this game can easily spend two hours or more doing the back-and-forth without seeing an improvement on the price.
If this is happening to you, you can exert some control by refusing to tolerate long waits. One easy thing to do is to stand up when the salesperson does and say that you will be browsing the cars in the showroom or getting something from your car. This may leave the impression that you might leave and will likely prompt a quick return.
Pain Point No. 4: I hate feeling pressured and manipulated by salespeople.
The amount of pressure that salespeople exert varies widely by dealership and brand. Some dealerships are still old school and apt to pressure a customer to close a sale, but many dealerships are now more aware that customers hate pressure, so their sales teams are less prone to bear down on buyers to close a sale.
In fact, in many cases, mystery shoppers have actually reported just the opposite problem. They can't get a salesperson to help them. In this situation, it's best to ask the dealership receptionist to page the sales manager, who will gladly assign an available salesperson to help you.
The best way to avoid the hard sell is to choose the right salesperson in the first place. Pay attention to how the salesperson treats you in the early stages of the process. If you feel uncomfortable, go no further.
Finally, you might like your salesperson but suddenly find yourself face-to-face with a manager who is acting as a "closer" and who won't take no for an answer. If this is the case, don't hesitate to simply leave. That's far better than being talked into a deal.
Pain Point No. 5: The sales pitches in the finance and insurance office make me feel uncomfortable.
As the profit has been squeezed out of the actual car purchase, many dealerships are pushing harder to realize profit elsewhere. According to the National Automobile Dealers Association (NADA), the gross margin on the sale of new cars and trucks fell to 4.2 percent in 2012 from 4.6 percent in 2011. But aftermarket income rose "because of increasing F&I and service contract dollars," according to NADA.
Sales of F&I products now represent 37 percent of new- and used-vehicle department gross profit, NADA says. That's the highest it's been in 10 years.
That means the hard sell may be coming on products like extended warranties and a car alarm once you hit the F&I office. If you aren't interested in the products being offered, be ready to say no, even if you encounter a persistent finance and insurance manager, such as the one profiled in "Confessions of an Auto Finance Manager."
Find Your Way Past the Pain
Car shoppers can have better car buying experiences and minimize their chances of being hurt by these pain points. Even if every car dealership hasn't changed, many of them have. My advice has always been to find the dealerships and salespeople who will treat you right, and give them your business. Word of mouth is one way to find these businesses. Using Edmunds Dealers Ratings and Reviews is another.
And while it would be nice if all the bad behavior I saw in "Confessions" disappeared tomorrow, you can use the tips here to make it disappear right now for you, your friends and family members. And that's a good start.
Read more articles in the Edmunds Confessions Series.